Payments – Are Cross Border Payments A Benefactor In The Pandemic Affected World Dear Clients and Friends, Marlin & Associates (M&A) is pleased to share our latest report on m&a values and trends in the Payments Technology sector. As you will see in the report, after a few slow months, m&a activity and values in this sector have come back strong - driven in part by (i) significant shifts to online spending during a never-ending pandemic that has accelerated trends across the B2B, B2C and P2P spaces that were already in place well before the coronavirus upended daily life; (ii) customer demand for ever more speed and transparency for these transactions; (iii) regulations that are driving more banks to partner with payment tech companies to facilitate transactions; and (iv) small and medium sized businesses (“SMEs”) increasingly seeking cross border opportunities due to access to more efficient (and less expensive) cross border payment solutions. Our own client pipeline largely mimics these trends. As you also will see in this report, market values for publicly traded firms have continued to remain robust. Several notable deals have been announced including Stripe acquiring Nigeria’s Paystack for $200mm to expand to the African continent, Italy’s Nexi SpA agreed to buy SIA SpA to in an all-share deal that values closely-held SIA at EUR 4.56 billion ($5.3 billion), and U.K. based online money transfer company, World Remit, is buying Africa-focused, app- based remittance ​​​​​firm Sendwave in a cash and stock deal worth more than $500mm. ​​Marlin & Associates is one of the most active investment banking and strategic advisory firms, providing trusted counsel to middle market companies worldwide that offer enterprise and vertical application software, services, data and analytics including firms across the FinTech ecosystem (Payments, Real Estate Tech, Payments, BankTech, WealthTech, InsurTech, LegalTech, GRC, Capital Markets Tech, Digital Tech, Business Intelligence, and Market Intelligence). Over the course of 18+ years Marlin & Associates has advised more than 200 fintech, data and analytic companies on m&a transactions in 27 countries. We enjoy helping CEOs and their shareholders achieve their most important strategic objectives. Please reach out to me ([email protected]) with any questions or to discuss this in further detail. We are keen to hear from you and happy to share what we are witnessing in the markets and how that could relate to your company. Kind regards, Aalap Proprietary & Confidential 1 © Copyright Marlin & Associates Holding LLC 2020 Payments Technology Cross Border Payments Update November 2020 © 2020 Marlin & Associates All Rights Reserved – Proprietary & Confidential Marlin & Associates Securities LLC, a wholly owned subsidiary of Marlin & Associates Holding LLC, is a broker-dealer registered with the Securities and Exchange Commission and is a FINRA/SIPC member firm (www.finra.org). Investment banking and/or securities are offered through Marlin & Associates Securities LLC. Marlin & Associates: Advisor Of Choice To Fintech, Data & Analytics Companies And Investors Worldwide ▪ Domain expert – advised on 200+ relevant transactions for over 18 years. Marlin & Associates (“M&A”) has been the domain expert in providing independent and unbiased strategic counsel and advisory services to global sellers and buyers of middle-market FinTech and Data & Analytics firms ▪ Local yet global – successfully served clients from 27 countries from the New York City headquarters and Toronto office ▪ Well recognized – “Middle Market IB of the Year,” “TMT Advisory Firm of the Year,” and “Cross Border Boutique IB of the Year,” and more than 20 “Deals-of-the-Year” Full Range of Transaction Services Industry Recognition and Awards Sector Coverage Payments ▪ TMT Advisory Firm of the Year Sell-side & ▪ Middle Market IB of the Year Buy-side M&A Bank Tech Regulatory Tech ▪ Cross Border Boutique IB of the Year Data & Analytics Debt Capital Capital Debt ▪ Advisory Firm of the Year Equity & Equity Raise Capital Markets Tech Fairness Fairness Opinions Digital Lending ▪ FinTech Deal of the Year ▪ Corporate M&A Deal of the Year Insurance Tech Joint Ventures Wealth Tech & Partnerships ▪ Middle Market IB of the Year Enterprise Software ▪ Middle Market Tech Deal of the Year Business Intelligence Proprietary & Confidential 3 © Copyright Marlin & Associates Holding LLC 2020 Several Cross Border Payments Themes Are Evolving In The Pandemic Affected World M&A Activity Has Picked Up Increased Customer Demand For Speed And Transparency Regulators Continue To Drive Changes In The Payment Ecosystem SME’s Continue To Adopt Cross Border Payment Alternatives Major Shifts In Spending Habits Drive Innovation Proprietary & Confidential 4 © Copyright Marlin & Associates Holding LLC 2020 Continued Consolidation Amongst All Parts Of The Payments Value-chain ▪ The payments landscape is becoming more complex and Illustrative Companies changing rapidly; large incumbents are getting pushed further down the value chain …recently acquired Paystack to geographically expand API-based ▪ Lockdown utilization levels have encouraged cross border payments services operators to scale up and private equity investors to jump in M&A Activity Has Picked Up …recently acquired SIA to create a Global incumbents have resorted to partnerships (8+ European giant in the rapidly- new partnerships for Visa, including with Safaricom, consolidating payments sector Qatar National Bank, Currencycloud, Fold, Rapyd, Flutterwave) ▪ Cross border players have favored scale through mergers, …recently acquired Wameja, its led by U.S. rivals seeking to build up share of digital joint venture partner in the transactions (Worldline / Ingenico, Far Point / Global Blue) HomeSend global payment hub ▪ Unicorns opted for both vertical and horizontal expansion (Klarna's acquisitions of Moneymour and Nuji) …recently acquired Sendwave to better-address customer needs for fast and secure digital payments ▪ New entrants have stockpiled growth capital (15+ successful funding rounds) Relevant Transactions Date Target Acquirer Description ▪ SIA designs, creates, and manages technology infrastructure for card & merchant solutions, digital 10/04/20 payment solutions, and capital market & network solutions ▪ Sendwave provides a remittance platform designed to help users complete cross border 08/25/20 transactions seamlessly ▪ Paya provides integrated payment and frictionless commerce solutions that help customers accept 08/03/20 and make payments, expedite the receipt of money, and increase operational efficiencies Source: Marlin & Associates Internal Analysis, PitchBook Proprietary & Confidential 5 © Copyright Marlin & Associates Holding LLC 2020 Increasing Customer Demand Along With The Push For Greater Transparency Act As Key Catalysts For Tech Innovation Illustrative Companies ▪ Customers continue to demand a seamless and transparent ….leverages cryptographically- payment experience, specifically “request to pay” secured distributed networks to transactions reduce friction in making and receiving payments Increased Customer ▪ Retail and corporate customers desires technology that can Demand For Speed be adapted to various use cases across the payments value …enables SME’s to send low- value cross border payments at And Transparency chain the same speed and transparency as larger banks SME’s prefer adaptive, easy-to-use platform solutions while large incumbents place higher value on speed, delivery guarantee’s, and ancillary services (e.g., …streamlines peer-to-peer currency hedging options, trade or procurement) (P2P) payments among account holders at U.S. banks ▪ Independent of size, the market seeks reliable payments delivery, access to preferred payment methods, and the ... Enhances real time data-rich ability to track exchange rates and schedule payments payments platform for the Australian digital economy Relevant Transactions Date Target Acquirer Description ▪ Paysley enables customers to use their smartphone as a point-of-sale device – without having to 10/21/20 setup an account with the merchant in advance ▪ Bankgirot is Sweden’s only clearing house for mass payments 10/06/20 ▪ P27 plans to create a single clearing and settlement platform across the Nordic region ▪ Associated Foreign Exchange (AFEX) offers a range of global payment, foreign exchange, and risk 09/17/20 management services Source: Marlin & Associates Internal Analysis, PitchBook, McKinsey & Company Proprietary & Confidential 6 © Copyright Marlin & Associates Holding LLC 2020 Regulatory And Compliance Initiatives Are Driving Banks To Partner With FinTechs ▪ Recent regulatory initiatives, such as PSD2 in Europe and Illustrative Companies open banking in the UK, result in greater supervision of new entrants and increased compliance costs for banks …recently partnered with crypto currency Paxos to enable PayPal ▪ At the same time, however, smaller banks are increasingly users in the U.S. to buy, hold and sell cryptocurrencies Regulators Continue finding options to reduce regulatory pressure by working with fintech companies to tap into regulatory arbitrage or working To Drive Changes In …announced new payment The Payment with other banks to build utilities to insulate against payments standard changes gateway functionalities (SNAP Ecosystem EBT) following expansion of NSDA pilot program in mid-2020 ▪ Regulation has begun to differentiate between the front end and back end …recently debuted Tap to Phone, enabling businesses to accept