eToro confirmed today it was gearing up for its public debut on Nasdaq in a $10.4 billion merger backed by banking entrepreneur Betsy Cohen. The brokerage will merge with a blank-check firm following investment from SoftBank’s Vision Fund 2.
The broker will merge with FinTech Acquisition Corp V, a special purpose acquisition company (SPAC). The deal will also include $650 million in investment from the likes of Fidelity Management & Research Co LLC and Wellington Management, among others. The combined companies will operate under eToro Group Ltd with an implied total equity value of $10.4 billion.
The move also has the backing of Betsy Cohen, Jefferson Bank and Bancorp Inc founder and notable figure in the latest SPAC trend. Whilst the boards of eToro and the SPAC have approved the deal, final approval is needed from shareholders, which is expected in the third quarter of 2021.
News of the deal led to a 15% jump in FinTech Acquisition Corp V’s share price.
Yoni Assia, eToro Co-Founder and CEO had this to say of the announcement: “Today marks a momentous milestone for eToro as we embark on our journey to become a publicly-traded company with Betsy Cohen and the team at FinTech V. I want to express my gratitude for the passion, hard work, drive and determination of all of the eToro team members over the past 14 years who have helped make this a reality.”
The Role Of SPACs
SPACs are essentially shell companies that use returns from IPOs to take private firms public. eToro isn’t the first company to take the SPAC route in recent years. Many companies are turning to SPACs for an easier path to stock exchanges versus traditional IPOs, demonstrated by the SoFi and Payoneer merger.
eToro is a hugely popular online platform among young retail investors. The company was started in 2007 and today boasts over 20 million users who actively trade in stocks, cryptos and commodities. Last year the company onboarded 5 million new users and generated revenues of $605 million, a 147% increase on the previous year.
eToro clients can manually trade on the financial markets or use the broker’s bespoke copy trading service to mirror the strategies of established investors. Bitcoin is particularly popular along with Tesla, Microsoft and Apple shares.
Regulated by the CySEC, the broker offers an extensive list of trusted payment methods and minimum deposits from $100. Leverage varies by asset but is offered up to 1:100 for international traders.
This latest news will see eToro join a number of Israeli tech firms, including mobile gaming company Playtika Holding Corp, in going public in the United States to leverage the surge in capital markets activity.