eToro Goes the SPAC Route
Posted on 03/16/2021
eToro Group Ltd. is a Bnei Brak, Israel-based no-fee trading app. eToro raised US$ 150 million in venture capital funding from investors like Spark Capital, China Minsheng Financial, SBI Holdings, Bracket Capital, Korea Investment Partners, DCG, Ping An Insurance, Anthemis Group, and CommerzVentures. eToro had US$ 605 million in revenue for 2020 and 18.7 million registered users. In 2013, Bitcoin was introduced in eToro. In 2016, eToro had 5.6 million registered users. eToro was founded in 2007 by Yoni Assia and Ronen Assia. In 2019, eToro launched zero commission stock trades. Upon closing of the transaction, the combined company will operate as eToro Group Ltd. and is expected to be listed on NASDAQ.
eToro does not make money by selling its trade flow data to hedge funds (payment-for-order flow), a practice that is prohibited in Europe. eToro makes money by a a spread between the price its pays for securities and the price it passes along to customers. 87% of eToro’s revenue is from trading revenue (spread), 7% interest income, and 6% is from currency conversion and other income.
eToro agreed to go public at an implied US$ 10.366 billion valuation, via acquisition by FinTech Acquisition Corp. V (Nasdaq: FTCV).
The deal includes a US$ 650 million PIPE from ION Investment Group, SoftBank Group Corporation (Softbank Vision Fund 2), Third Point LLC, Fidelity Management & Research Company LLC, and Wellington Management Company.
Sources of Funding
Existing eToro shareholder equity: US$ 9,466,000,000
Cash held in SPAC trust: US$ 250,000,000
Proceeds from PIPE: US$ 650,000,000
The implied enterprise valuation of eToro of approximately US$ 9.6 billion.
Goldman Sachs & Co. LLC is serving as financial advisor to eToro and Citi is serving as financial advisor to FinTech V in connection with the business combination. Morgan, Lewis & Bockius, LLP is advising FinTech Acquisition Corp. V. Skadden, Arps, Slate, Meagher & Flom LLP is advising eToro.