Fintech

Berkshire Global: An update on the mergers and acquisitions landscape in wealth management, financial technology and private markets

Published

8 months ago

29 May, 2024

Berkshire Global: An update on the mergers and acquisitions landscape in wealth management, financial technology and private markets

The global mergers and acquisitions market collapsed in 2023, weighed down by rising interest rates and lingering questions about the health of the economy. That said, there were some pockets of strength, including wealth management, where the trading process was nominally down from the previous year but robust compared to the recent past.

With 2024 now nearing its halfway point, I reached out to some colleagues at Berkshire Global to get a better sense of the current dynamics impacting specific market segments and to look ahead. Their extensive experience and deep market knowledge will provide valuable insights:

Bomy Hagopian, CFA, Partner, co-leader of Berkshire’s wealth management practice
Mitchell Spector, partner, who leads Berkshire’s financial technology coverage and practice
Ted Gooden, partner, who founded Berkshire’s private markets business

Bomy, how do you think 2024 will perform compared to last year regarding M&A activity? Also, could the second half of the year be stronger if rates were cut?

Bomy: Due to a number of factors, we expect it to be another strong year for mergers and acquisitions in the asset management industry. First, the number of private equity firms entering the sector to support acquirers continues to increase, while existing acquirers remain highly active and engaged. Second, financial advisors continue to age, and mergers and acquisitions represent a solution to the industry’s ongoing demographic and succession planning challenge. Additionally, the costs associated with running an RIA are rising rapidly, whether it’s expenses to improve technology or keep up with compliance issues.

Therefore, smaller companies’ desire to reduce those cost burdens, as well as free up management time, will also likely fuel more deals in the future. Finally, not only are more wealthy people wanting financial advice, but existing clients also want more specialized service offerings. This increased demand within the consumer market for additional services should also support increased M&A activity.

As for rates, a more accommodative Fed could encourage more activity and lead to a stronger second half of the year. However, the forces impacting the current landscape are so profound that rate policy, while not an afterthought, will not be the primary driver of operations, one way or another.

Ted, there has been a boom in private credit in recent years. What impact did it have on the negotiations?

Ted: We are seeing a growing appetite from investors, which is starting to drive strategic interest from RIAs to access private credit, private equity and even some real estate investments. These private market managers have benefited from a pullback on various types of traditional bank lending, which accelerates the acquisition of deals for private markets products. Now that RIAs are starting to see the value in these products, their use is likely to continue despite the ups and downs in interest rates.

These private market products generally must be offered in semi-liquid form, such as an interval fund. Advisors also require them to present a variety of risk tolerances for their clients. Properly establishing private credit funds for RIAs takes a lot of time and resources due to the need to educate both advisors and their clients. There is therefore still a lot of untapped potential in distribution to the retail market.

One consequence is that acquisition opportunities exist for asset managers to acquire distribution platforms whose sales teams have relationships with independent RIAs and broker-dealers. A second consequence is that in some cases asset managers are starting to consider acquiring investment companies in private markets. And a third consequence, to top it all off, is that larger, institutionally focused private markets managers are considering acquiring complementary private markets product companies that also have industry reach. RIA.

Moving on to fintech and wealthtech. Mitch, what are the current prospects for closing the deals? To what extent have soaring valuations in the tech sector impacted the landscape more generally?

Mitch Spector Mitch: Last year unfolded a little slower than expected, largely due to high interest rates, but fintech and wealthtech mergers and acquisitions accelerated in the latter part of 2023. Difficulties in the financial market , especially for smaller businesses, have also led to restructuring and cost cutting. 2024 started with little deal flow, as often happens at the beginning of the year. On the bright side, the retirement technology sector has seen several large deals. AI capabilities will attract significant attention in deals for companies that have unique offerings instead of standardized products or that use surface-level AI simply to capitalize on hype.

As stock prices rise, larger operators are primarily looking for sellers with sufficient scale to make relevant acquisitions, including those with high valuations. This willingness to buy targets of a certain size, revenue growth, and in-demand technology indicates that mergers and acquisitions are set to increase throughout the remainder of 2024. Additionally, venture capital funding has begun to re-emerge, which, in future, it could allow some of these growing fintech and wealthtech companies to sell to strategic buyers who have strong relationships with wealth management firms, who are the ultimate buyers of their products.

Bruce Cameron is the co-founder of Berkshire Global Advisors,
the leading investment bank for M&A financial services and partner of the firm.

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Fintech

Lloyds and Nationwide invest in Scottish fintech AI Aveni

Published

6 months ago

29 July, 2024

FinCrypto Staff

Lloyds and Nationwide invest in Scottish AI fintech Aveni

Lloyds Banking Group and Nationwide have joined an £11m Series A funding round in Scottish artificial intelligence fintech Aveni.

The investment is led by Puma Private Equity with additional participation from Par Equity.

Aveni creates AI products specifically designed to streamline workflows in the financial services industry by analyzing documents and meetings across a range of operational functions, with a focus on financial advisory services and consumer compliance.

The cash injection will help fund the development of a new product, FinLLM, a large-scale language model created specifically for the financial sector in partnership with Lloyds and Nationwide.

Joseph Twigg, CEO of Aveni, explains: “The financial services industry doesn’t need AI models that can quote Shakespeare, it needs AI models that offer transparency, trust and, most importantly, fairness. The way to achieve this is to develop small, highly tuned language models, trained on financial services data, vetted by financial services experts for specific financial services use cases.

“FinLLM’s goal is to set a new standard for the controlled, responsible and ethical adoption of generative AI, outperforming all other generic models in our selected financial services use cases.”

Robin Scher, head of fintech investment at Lloyds Banking Group, says the development programme offers a “massive opportunity” for the financial services industry by streamlining operations and improving customer experience.

“We look forward to supporting Aveni’s growth as we invest in their vision of developing FinLLM together with partners. Our collaboration aims to establish Aveni as a forerunner in AI adoption in the industry, while maintaining a focus on responsible use and customer centricity,” he said.

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Fintech

Fairexpay: Risk consultancy White Matter Advisory acquires 90% stake in fintech Fairexpay

Published

6 months ago

29 July, 2024

FinCrypto Staff

Treasury Risk Consulting Firm White Matter Alert On Monday he announced the acquisition of a 90% stake in the fintech startup Fair payment for an undisclosed amount. The acquisition will help White Matter Advisory expand its portfolio in the area of cross-border remittance and fundraising services, a statement said. White Matter Advisory, which operates under the name SaveDesk (White Matter Advisory India Pvt Ltd), is engaged in the treasury risk advisory business. It oversees funds under management (FUM) totaling $8 billion, offering advisory services to a wide range of clients.

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White Matter Advisory, based in Bangalore, helps companies navigate the complexities of treasury and risk management.

Fairexpay, authorised by the Reserve Bank of India (RBI) under Cohort 2 of the Liberalised Remittance Scheme (LRS) Regulatory Sandbox, boasts features such as best-in-class exchange rates, 24-hour processing times and full security compliance.

“With this acquisition, White Matter Advisory will leverage Fairexpay’s advanced technology platform and regulatory approvals to enhance its services to its clients,” the release reads.

The integration of Fairexpay’s capabilities should provide White Matter Advisory with a competitive advantage in the cross-border remittance and fundraising market, he added.

The release also states that by integrating Fairexpay’s advanced technology, White Matter Advisory aims to offer seamless and convenient cross-border payment solutions, providing customers with secure options for international money transfers.

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Fintech

Rakuten Delays FinTech Business Reorganization to 2025

Published

6 months ago

29 July, 2024

FinCrypto Staff

Rakuten (Japan:4755) has released an update.

Rakuten Group, Inc. and Rakuten Bank, Ltd. announced a delay in the reorganization of Rakuten’s FinTech Business, moving the target date from October 2024 to January 2025. The delay is to allow for a more comprehensive review, taking into account regulatory, shareholder interests and the group’s optimal structure for growth. There are no anticipated changes to Rakuten Bank’s reorganization objectives, structure or listing status outside of the revised timeline.

For more insights on JP:4755 stock, check out TipRanks Stock Analysis Page.

Source

Fintech

White Matter Advisory Acquires 90% Stake in Fintech Startup Fairexpay

Published

6 months ago

29 July, 2024

FinCrypto Staff

White Matter Advisory Acquires 90% Stake in Fintech Startup Fairexpay

You are reading Entrepreneur India, an international franchise of Entrepreneur Media.

White Matter Advisory, which operates under the name SaveDesk in India, has announced that it is acquiring a 90% stake in fintech startup Fairexpay for an undisclosed amount.

This strategic move aims to strengthen White Matter Advisory’s portfolio in cross-border remittance and fundraising services.

By integrating Fairexpay’s advanced technology, White Matter Advisory aims to offer seamless and convenient cross-border payment solutions, providing customers with secure options for international money transfers.

White Matter Advisory, known for its treasury risk advisory services, manages funds under management (FUM) totaling USD 8 billion.

Founded by Bhaskar Saravana, Saurabh Jain, Kranthi Reddy and Piuesh Daga, White Matter Advisory helps companies effectively manage the complexities of treasury and risk management.

The SaveDesk platform offering includes a SaaS-based FX market data platform with real-time feeds for over 100 currencies, bank cost optimization services, customized treasury risk management solutions, and compliance guidance for the Foreign Exchange Management Act (FEMA) and other trade regulations.

Fairexpay is a global aggregation platform offering competitive currency exchange rates from numerous exchange partners worldwide. Catering to both private and corporate customers, Fairexpay provides seamless money transfer solutions for education, travel and immigration, as well as simplifying cross-border payments via API and white-label solutions for businesses. Key features include competitive currency exchange rates, 24-hour processing times, extensive currency coverage of over 30 currencies in more than 200 countries, and secure, RBI-compliant transactions.

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