Finance Monthly September 2019 Edition

9 www.finance-monthly.com NEWS - MONTHLY ROUND-UP News you Can’t Afford to Miss GLOBAL FINTECH INVESTMENT SUBDUED IN H1’19, BUT BIG M&A DEALS LOOM ON HORIZON Global FinTech funding got off to a slower start during the first half of 2019, with $37.9 billion of investment globally across 962 deals. The first half of 2019 is trending downward at the halfway mark, reflecting a pull-back in mega-deals compared to 2018 accord- ing to the Pulse of FinTech H1’19, a bi-annual report on global FinTech invest- ment trends published by KPMG. Large M&A and buyouts accounted for the biggest deals to date in 2019, in- cluding a $6.9 billion buy- out of Dun & Bradstreet in the US, a $6 billion buyout of Concardis in Germany, and a $1.3 billion buyout of France-based eFront. Oth- er massive deals appear likely to close in the near future, including Fidelity’s acquisition of Worldpay ($43 billion), Fiserv’s ac- quisition of First Data ($22 billion), and the merger of Global Payments with Total System Services ($21.5 billion). The diversity of jurisdic- tions attracting significant FinTech funding continued to grow, with big deals dur- ing the first half of 2019 coming from France, Ar- gentina, Canada, China, Germany, and the United States. The diversity of locations likely helped to keep FinTech investment relatively strong despite the lack of large deals in any one jurisdiction. FinTech investors across jurisdic- tions remained focused on a smaller number of large deals, similar to investment trends seen more broadly. 2019 Key Highlights • Global FinTech invest- ment dropped off last year’s pace - from $120 billion in 2018 to only $37.9 billion mid-way through 2019. This decline might be short-lived given the massive M&A deals on the horizon. • Corporate-participatory venture investment, which reached an astounding $25.3 billion in 2018, fell to just $4.75 billion in H1’19 as corporates and their venture arms took a pause from large deal activity. • PE firms maintained the torrid pace of investment set in 2018 - propelled by the continued maturation of the FinTech sector and resulting investment oppor- tunities in category lead- ers. Global PE investment reached over $1.9 billion in the first half of the year. • M&A activity took a breather in Q2’19, with less than $4 billion of activity globally versus nearly $20 billion in Q1. This lull is ex- pected to reverse quickly, given recently announced deals by Worldpay, First Data, and Total System Services expected to close in the second half of 2019. • There has been a pro- nounced decline in overall investment into the block- chain and cryptocurrency sectors so far this year, with investment dropping from $5 billion across 586 deals in 2018 to only $1 billion across 171 deals in H1’19. • InsurTech investment volume dropped dramati- cally over the first half of 2019 as early-stage fund- ing sank. Total investment in InsurTech dropped from $7.6 billion in 2018 to only $1.1 billion in H1’19. MARKET CAPITALISATION OF GLOBAL TOP 100 COMPANIES AT RECORD $21 TRILLION The market capitalisation of the world’s 100 largest public companies has in- creased by $1,040bn (5%) in 12 months, according to PwC’s Global Top 100 ranking. The rise is more subdued than the 15% increase re- ported in 2018, reflecting more challenging market conditions. Growth in market capi- talisation in the past year has been primarily driven by US companies, on the back of a robust eco- nomic environment. Both Greater China (-4%) and Europe (-5%) registered a decrease in market capi- talisation, reversing last year’s gains. The technology sector continues to dominate, although the healthcare, consumer services and telecommunications sec- tors performed most strongly over the past year. For the fifth year running, the US accounts for more than half (54) of the Global Top 100 by a number of companies with growth of 9%, outpacing the overall. US companies represent 63% of the total market capitalisation, up from 61% last year. Greater China is the sec- ond-largest component of the Global Top 100 by market capitalisation, de- spite a 4% decline in the past 12 months follow- ing trade uncertainties and their impact on local market sentiment. This contrasts with the 57% in- crease in 2018 when three new companies entered the Global Top 100 and two rose to the top ten. Geopolitical challenges including uncertainty on Brexit are likely to have impacted European based companies in the ranking in the past year. Three Eu- ropean based companies have left the Global Top 100 and overall European based companies in the ranking lost 5% in mar- ket capitalisation. Recent trends for companies from the rest of the world are more positive, with market capitalisation increasing by 22%. Overall, the best-perform- ing country in the ranking in relative terms was India. Despite only two compa- nies in the Global Top 100, a strong domestic stock market performance and robust earnings increased their market capitalisation by $63bn or 37%.