Australia bucks fintech IPO trend
Australia has been an exception when it comes to fintech IPOs but the experiences of Afterpay and Prospa could spur other fintechs to go down the listing path, according to a KPMG report.
While its Pulse of Fintech report does not track IPOs, the report acknowledged that despite the increasing number of tech IPOs more broadly – the level of IPO activity in Australia is scant – a trend also found in Asia with fintech IPOs also generally being non-existent.
However, the report did note that Australia saw SME lending company Prospa hold a successful IPO in June.
"The dip in fintech investment in Australia is more of a pause, with major activity imminent for the second half of the year,” KPMG Australia partner and head of fintech Dan Teper said.
“Beside venture capital investment in fintech startups, there is also the possibility of future listing and M&A activity, following the success of fintech IPOs such as Prospa and Afterpay.
“Their experience could encourage other fintech companies to consider IPOs,” Teper added.
A recent report from HLB Mann Judd, however, found that for many other fintechs the path to listing did come with challenges.
For HLB Mann Judd, the financial backing for fintechs is mainly sourced through venture capital investment.
Indeed, the biggest Australian fintech transaction recorded by the Pulse of Fintech report in the first half of the year was the Airwallex US$100 million Series C funding in March 2019, which was also the third biggest deal in Asia for the period.
The report also found that digital banks continued to draw significant venture capital interest during the first half of 2019.
“So far this year Australian regulators have issued three banking licences to Australian neobanks Judo, Volt and 86 400, and Xinja expects its full licence soon,” the report said.
It also noted that the first international neobank, UK-based Revolut, has also announced a beta version of its app in Australia ad a number of other overseas digital banks are also focused on international expansion.
The largest fintech deal regionally was the US$2 billion NCF Wealth Holdings merger in China, followed by the US$200 milion Blockchain Exchange Alliance Series A funding in South Korea.
Regionally, the modest start for fintech investment in Asia followed a record-shattering level of investment in 2018.
A lack of megadeals in China accounted for the majority of the decline, with investors holding back given both the US-China trade tensions and the increasing regulatory focus being given to fintech and fintech companies by Beijing.