Another week and another Israeli Unicorn is going public. This time fintech company eToro has joined the SPAC train, becoming one of Israel’s 10 biggest companies in the process.
Over 75 million trades in a month
Social investing platform eToro will become a public company via merger with SPAC firm FinTech Acquisition Corp. V, and based on an estimated implied equity value in the $10.4 billion range.
The Israeli company reports a very successful year, during which private customers increased trading sessions, the rise of digital wealth platforms, growing retail participation, and mainstream crypto adoption. Furthermore, eToro reported over 5 million new registered users at a rate of 440,000 new users per month - in comparison to 2019’s rate of 192k new users per month. This resulted in the company generating over $600 million in gross revenues count over the last year. In January 2021 alone, more than 1.2 million new users were registered, with over 75 million trades recorded during that time - in comparison to averaging nearly 8 million monthly trades in 2019, and rising up to 27 million in 2020.
The transaction includes commitments for a $650 million common share private placement from leading investors including ION Investment Group, Softbank Vision Fund 2, Third Point LLC, Fidelity Management & Research Company LLC, and Wellington Management. Targeting Q3 for execution, the newly merged companies will trade on NASDAQ under eToro.
The eToro platform, which was founded in 2007 by Yoni Assia, Ronen Assia, and David Ring, enables users to pick from trading in stocks (or partial stocks), ETFs, goods, indexes, currencies, crypto assets, and smart portfolios. Through eToro’s platform, users can trade directly on the market, invest in smart portfolios, or replicate strategies of popular investors in a push of a button. The company currently employs close to 1,100 people, with 700 of them based in Israel.
“We founded eToro with the vision of opening the global market for everyone to trade and invest in a simple and transparent way. Today, eToro is the world's leading social investment network. Our users come to eToro to invest, but also to communicate with each other; to see, follow, and automatically copy successful investors from all around the world,” stated Yoni Assia, Chief Executive Officer of eToro. “We created a new category of wealth management – social investing – and we are dominating the market as evidenced by our rapid expansion.”
Betsy Cohen, Chairman of the Board of Directors of FinTech V, said, “As a pioneer in the evolution of SPACs, Fintech Masala, our sponsor platform, seeks out companies with outsized growth, effective controls and excellent management teams. eToro meets all three of these criteria. In the last few years, eToro has solidified its position as the leading online social trading platform outside the U.S., outlined its plans for the U.S. market, and diversified its income streams. It is now at an inflection point of growth, and we believe eToro is exceptionally positioned to capitalize on this opportunity.”
Both existing investors and employees will reclaim majority stake in the company, and will hold around 91% of the merged company (as long as FinTech V doesn’t realize its shares).