BANKING
What is the state of the current PE market ? A lot has been made of the current economic conditions , and whether they ’ re conducive to investment . It ’ s possible that the latest economic developments – high inflation and the spectre of a global recession – may eventually put a dent in PE ’ s interest in fintech , but the latest figures we have underline just how rapidly PE investment has grown over the last few years .
“ Private equity investors have become increasingly attracted to fintech over the last five years ,” says Sam Lawson , VP of Capital Markets for Crowdcube . “ US $ 12bn was invested in fintech by PE across 144 deals in 2021 – a new record that ’ s substantially above the prior record of US $ 5bn in 2018 . Fintech ’ s relatively higher gross margin and cash flow profile make it attractive to PE . It ’ s also an extremely scalable sector – financial services touch everyone , everywhere .”
Private equity is still dwarfed by venture capital funding , though . VC investment in fintech amounted to US $ 115bn in 2021 , according to KPMG ’ s Pulse of Fintech report , almost triple the US $ 46bn investment that VCs made into fintech the year before . This heightened level of investment may reflect an industry coming of age , or it might indicate that new subsectors are coming to the fore .
Anton Ruddenklau , Global Fintech Leader for KPMG , says : “ We ’ re seeing an incredible amount of interest in all manner of fintech companies , with record funding in areas
“ VCS WILL FOCUS RESOURCES ON THEIR EXISTING PORTFOLIO COMPANIES , MEANING THE RATE OF NEW INVESTMENT MAY SLOW ”
SAM LAWSON VP CAPITAL MARKETS , CROWDCUBE
54 October 2022