SPAC JOFF Fintech Acquisition Raises $414 Million in Hunt for Fintechs

Yesterday, JOFF Fintech (NASD:JOFFU) filed an 8-Okay with the Securities and Change Fee (SEC) with regard to its preliminary public providing (IPO) that floated on the Nasdaq on February ninth. The SPAC indicated that it had raised $414 million, together with warrants, in a hunt for a merger or acquisition of a Fintech thus becoming a member of a rising variety of SPACs trying to do the identical.

In its S-1 filed with the SEC, JOFF defined its aim:

“Whereas we might pursue an acquisition in any enterprise business or sector, we intend to pay attention our efforts figuring out one or a number of companies within the monetary companies business with an enterprise worth of roughly $700 million to $2 billion, with specific emphasis on companies which might be offering or altering know-how for, or creating innovation in, conventional monetary companies (“Fintech”), companies specializing in asset and/or wealth administration, and/or finance-related actions, along with companies specializing in gaming and/or eSports. We imagine the creation and supply of economic companies merchandise for shoppers and companies will proceed to bear vital change over the foreseeable future. There was a seamless improve within the degree of inter-connection between revolutionary know-how and monetary companies and we count on this development to proceed to develop. Our religion on this sector is validated by latest monetary markets exercise, with financing exercise within the Fintech house rebounding because the starting of the COVID-19 pandemic (17% quarter-on-quarter improve to $9.3 billion within the second quarter of 2020) and Fintech mega-rounds ($100 million+) reaching a brand new quarterly excessive of 28 within the second quarter of 2020. There are quite a few potential targets whose focus is using know-how to facilitate the supply of economic companies; based on CB Insights, there are presently 66 VC-backed Fintech unicorns value a mixed $248 billion. Inside Fintech, we’ll goal companies throughout all sub-sectors, however specifically, we imagine iGaming and eSports characterize a sexy finish market. In accordance with Newzoo, the worldwide video games market will develop to over $200 billion in income by 2023, with a 5 12 months compound annual progress charge, or CAGR, of roughly 8%. Moreover, the regulated on-line gaming market is predicted to develop at a CAGR of 11.5% from 2020-2027, reaching an estimated $127 billion in income by 2027. These potential targets exhibit a broad vary of enterprise fashions and monetary traits that vary from very excessive progress revolutionary corporations to extra mature companies with established manufacturers, revenues and money flows.”

JOFF is one among a number of SPACs pursuing the Fintech sector that’s booming due partially to a digital transformation in monetary companies that has been supercharged by the continuing COVID-19 well being disaster. Whereas Fintech was already scorching pre-pandemic, the thesis is the transformation to digital finance has been fueled by the shift to digital places of work, digital funds, and little need to go to a financial institution department. There are tons of of early-stage ventures within the Fintech sector focusing on banking, funds, open banking, on-line capital formation, investments, and far more. However will the SPAC Fintech frenzy drive valuations increased than they deserve? Maybe.

In a market the place billions of {dollars} are trying to find returns and rates of interest are low, fairness investing has boomed. The IPO market in 2020 was the most important in latest historical past and that will proceed by 2021. SPACs are serving to to energy this IPO market. Will probably be attention-grabbing to see how among the choices carry out as soon as rates of interest improve and scorching cash seems to be for the subsequent new shiny.

No matter how these SPAC IPOs carry out, Fintech is right here to remain – representing the way forward for monetary companies. It simply might take a while for the efficiency of a few of these Fintechs to catch as much as public market valuations.