Financial Technology M&A Update Q2 2016

July 15th, 2016 Table of Contents

 M&A Market Brief – Page 3-5

 FinTech M&A Trends & Drivers – Page 6

 Notable FinTech M&A Transactions, Q2 2016 – Page 7-9

 Publicly Traded FinTech Firms (Valuation Table) – Page 10-11

 M&A Spotlight: Mercury UK Holdco Ltd. / ISP Processing – Page 12

 M&A Spotlight: / Target Group – Page 13

 M&A Spotlight: BM&F Bovespa / Cetip – Page 14

 M&A Spotlight: Blackboard Inc. / Higher One – Page 15

DISCLAIMER The information contained herein is of a general nature and is not intended to address the circumstances of any particular company, individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. We perform our own research and also use third party research. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. This is not an offer or recommendation to buy or sell securities nor is it a recommendation to merge, acquire, sell or exit a specific company or entity. We do not hold any equity or debt position in any of the securities listed herein as of the date of this report.

Sources for our research and data include: MergerMarket, FT Partners, Wall Street Journal, S&P Capital IQ, Company Websites, SEC Filings, Bloomberg

M&A Market Brief

Q2 2016 M&A Activity Slows But Remains Promising

Worldwide United States FinTech

• Global M&A activity during the • The M&A climate in the United • Overall M&A activity across the second quarter of 2016 improved States is in the process of Financial Technology industry slightly over that of the first rebalancing after a record- remains robust YTD 2016. Several quarter. After 2015's surge of M&A setting year. Nonetheless, US deal notable deals were announced in activity, deals are now adjusting activity in the second quarter Q2 2016, encompassing payments, back to a sustainable level. remained stable. software, outsourcing, etc.

• Global M&A deal value in H1 2016 • In Q2 2016, deal value totaled • In Q2 2016, the largest transaction was down 26.6% compared to that $313.2 billion, compared to $248.8 announced in the Financial of H1 2015. billion in Q1 2016. Technology sector was Brazil's BM&F Bovespa announced • Political uncertainties such as the • In H1 2016, United States M&A deal acquisition of Cetip for $3.3 billion. UK's referendum on staying in the value totaled $563 billion, with European Union (EU) and the 2,242 transactions. This represents • Other notable M&A transactions United States election cycle have a 31% drop in value from H1 2015. announced this quarter include contributed to the M&A cooldown, Blackboard's announced and they will continue to do so. • The uncertainty resulting from the acquisition of Higher One and Mercury UK Holdco Limited's • The drama surrounding the United Kingdom's departure from the EU lead to a 27% drop in US announced acquisition of ISP United Kingdom's referendum Processing. caused many firms to postpone outbound activity into the deals. This was a major reason UK. Outbound activity in the UK why deal value for Q2 2016 in the will remain low until the outcomes • The median revenue multiple in United Kingdom fell 50.5% of the post-exit negotiations H1 2016 fell to 1.7x from 2.0x in H2 compared to that of Q1 2016. We become clearer. 2015. (Berkery Noyes) expect to see an uptick in UK deal volume in the coming months as • The M&A environment for the US • Within Financial Technology, the the deals that were postponed are technology industry remained M&A environment remained revisited. robust despite the global M&A favorable. In Q2, FinTech totaled downturn. In H1 2016, technology 58 deals, with a value of $23.81 • China is relaxing its regulations on deal value rose to $81 billion billion in closed transactions. bidding for acquisitions, which will compared to $65 billion in H1 2015, allow the country to better with deal volume increasing 4%. compete with the United States and Europe. This quarter, China made four mega outbound acquisitions.

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Global M&A Deal Volume – Quarterly Comparison

Quarterly M&A activity Q1 Q2 Q3 Q4 Value of deals (US $Bn)

2007 801.5 1,280 852 734.4

2008 593.2 678.2 684.9 458.8

2009 420.8 396.4 327.6 570.1

2010 461.2 433 429.9 713

2011 614.6 586.3 599.6 479.4

2012 464.8 565.5 522.9 757.5

2013 446.9 559.7 646.4 573.3

2014 566.7 963.9 855.7 869.7

2015 758.9 1,047.1 971.2 1,205.1

2016 633 688.7

Source: MergerMarket

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Global FinTech M&A Activity

The volume and size of completed FinTech M&A transactions have been increasing globally.

$25.00B $23.81B 70 58 60 $20.00B 53 50 41 $15.00B 36 40 $12.12B

30 $10.00B 23

20 $5.00B $3.19B 10 $1.38B $374.9M $0.00M 0 2012 Q2 2013 Q2 2014 Q2 2015 Q2 2016 Q2 Total Capital Invested Deal Count

Source: Solganick & Co. Analysis, PitchBook

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FinTech M&A Trends & Drivers 2016

Transaction Security: As technology continues to advance within FinTech along with steady growth in e-commerce and mobile usage, more people are starting to turn to card-not-present transactions. This is creating a need for better security measures in order to combat fraud and to safeguard users’ information. Looking forward into the next couple of years, it can be expected that many more merchants and issuers will adopt and integrate newer security measures such as encryption, tokenization and biometrics.

Global Money: Consumers and businesses with global mobility are addressing their cross-border transaction needs through the emergence of International Payment Specialists. These specialists can provide customers and businesses with cross-border payment and foreign exchange services that are more cost-effective, efficient and transparent than what traditional can offer. Some notable players in the space include Currencies Direct and FIRMA Foreign Exchange.

Partnerships Between Old And New: While traditional banking institutions still maintain the majority of customer relationships, there are niches in FinTech where the new and innovative combine with the more traditional methods of banking. FinTech presents financial institutions with new strategic options, with the most interesting and notable option being partnerships. We already see banks and FinTech companies partnering in lending and wealth management.

Digital Wealth Management: Digital wealth managers or robo advisors are beginning to emerge. Although digital wealth managers currently manage a small portion of the assets within the industry, digital wealth managers have the potential to cause massive disruption in the wealth management industry. Robo advisors like Personal Capital and Wealthfront are providing many of the same services such as financial planning at a fraction of the cost that traditional advisors charge.

Blockchain: Blockchain is a distributed ledger of all transactions between counterparties across a peer-to-peer network. Adopting blockchain can reduce counterparty and operational risk, eliminate market inefficiencies, reduce fraud and increase transparency. In the industry, blockchain opens up various revolutionary possibilities such as smart contracts. Firms like IBM are exploring and developing new forms of blockchain applications.

Source: FT Partners, Accenture

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Notable FinTech M&A Transactions, Q2 2016 Deal Announcement EV / EV / Target Acquirer Value Target Description Date Rev EBITDA (mm) Provider of technology and payment 6/30/2016 Higher One Blackboard 260 1.5 services to the higher education industry. The company provides transaction VietUnion Online processing, online payment, 6/23/2016 NTT Data Services withdrawal and online payment registration services. Provider of a banking software that Sharp enables users to exchange 6/22/2016 Nymbus BancSystems requirements related to ATM/Debit Card and check processing services. Black Knight Provider of business intelligence 6/22/2016 Motivity Solutions 36 Financial Services software for the mortgage industry. The company provides enterprise lending services to help mortgage 6/16/2016 Optimal Blue GTCR banks, community banks and credit unions facilitate the mortgage Developer of cloud-based platform for 6/16/2016 eSupply Systems RealPage 7 0.2 the property-management industry. Provider of software and business process outsourcing to financial 5/27/2016 Target Group Tech Mahindra 162 2.6 services, insurance and brokers clients. De La Rue Cash Provider of cash processing hardware, 5/22/2016 Processing CPS Topco 14 0.5 software and related services. Solutions Nera Payment 5/19/2016 SA 63 1.9 Developer of payment software. Solutions Coin's Wearable Provider of 5/18/2016 Payments Assets technology. Provider of data aggregation, Portfolio Asset reporting and collaboration platform 5/17/2016 RealPage 5 Management for institutions holding multiple real estate asset classes. The company provides entity management and financial software 5/16/2016 Infoscreen Microgen 2 1.4 used by clients in the trust and fund administration sector. Provider of secure electronic Black Knight 5/16/2016 eLynx document-delivery services to the Financial Services mortgage industry. Automated Trading Provider of automated trading 5/16/2016 Citadel Securities Desk technology and services.

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Notable FinTech M&A Transactions in Q2 2016 (cont.) Deal Announcement EV / EV / Target Acquirer Value Target Description Date Rev EBITDA (mm) The company is engaged in trading- technology development and CLX 5/13/2016 mBlox 117 provides automated system in order Communications to analyze the markets and manage risk. DIMOCO Direct 5/11/2016 Onebip Mobile Provider of mobile payment services. Communications Provider of electronic trading platform 5/11/2016 Dojima Broadridge Financial and clearing software. Provider of electronic trading platform 5/10/2016 VeriFirm.in Confirmation.com and clearing software. The company provides a consolidated ITG Investment trading platform that can handle multi- 5/10/2016 Leucadia National Research asset listed and over-the-counter (OTC) derivatives. Developer of specialty financial 5/5/2016 Servelec Abacus Servelec Group software. The company provides independent and in-depth research and reviews of 5/5/2016 NextAdvisor.com Bankrate 79 14.7 credit cards, personal finance and services. The company provides a form of Pandora Venture WRIT Media Group, 5/3/2016 4 digital currency, known as Capital Inc. cryptocurrency. Setefi Processing is the Italian Advent International; payment processing platform of Setefi Processing & 5/3/2016 Bain Capital; 1,200 Intesa Sanpaolo, and ISP Card is a ISP Card Clessidra payment processing platform of Intesa Sanpaolo. Chesapeake Developer and provider of financial 5/2/2016 Trintech System Solutions and treasury management software. The company provides restricted authorization network platform which 5/2/2016 StoreFinancial Emerchants 35 allow users to restrict card funds to a select group of merchants. The company operates a platform for mobile card payments enabling users 4/27/2016 Payleven SumUp Payments to process card payments using a smartphone or tablet.

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Notable FinTech M&A Transactions in Q2 2016 (cont.) Deal Announcement EV / EV / Target Acquirer Value Target Description Date Rev EBITDA (mm) The company offers financial institutions and corporate treasuries Calypso Bridgepoint and 4/19/2016 an integrated trading, risk and Technology Summit Partners processing system for derivatives and treasury products. The company's back-end software focuses on electronically capturing, Goldleaf Enterprise 4/19/2016 Battery Ventures processing and analyzing check data Payments Alogent and images, including those captured on mobile devices. The company provides an application and debit card enabling users to 4/12/2016 RocketBank Otkritie conduct their banking transactions through their smartphones. Operator of a central securities depository and derivatives registrar 4/8/2016 Cetip BM&F Bovespa 3,300 for private fixed income securities and over the counter derivatives in Latin America. Provider of prepaid virtual cards and 4/6/2016 Ixaris Technologies Ixaris Systems Ltd 6 online payment applications. Provider of socially-enabled equity 4/5/2016 TradeKing Ally Financial 275 and options trading services. The company offers payment and Net 1 UEPS 4/4/2016 Masterpayment acquisition services for all major Technologies European debit and credit cards. Provider of global IT and business The Blackstone 4/3/2016 MphasiS 825 process outsourcing (BPO) services to Group banks and financial institutions. The company offers a software that allows users to instantly send and 4/1/2016 PhonePe 15 receive money to anyone using just their mobile number.

Source: FT Partners, PitchBook

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Publicly Traded FinTech Firms, Valuation Table, Q2 2016

Payments Ticker Stock Price Market Cap EV / Revenue EV / EBITDA

American Express Company AXP 60.76 59.83B 2.6x 10.1x

Blackhawk Networks HAWK 33.49 1.84B 0.7x 8.3x

Discover Financial Services DFS 53.59 23.03B 3.9x 9.8x

Fiserv, Inc. FISV 108.73 25.02B 5.7x 17.3x

Global Payments Inc. GPN 71.38 9.29B 4.1x 19.2x

MasterCard Inc MA 88.06 99.18B 10.0x 17.8x

PayPal Holdings Inc. PYPL 36.51 44.52B 4.5x 20.0x

Total System Services Inc. TSS 53.11 9.67B 3.9x 13.6x

Vantiv, Inc. VNTV 56.6 8.36B 4.6x 20.4x

VeriFone Systems, Inc. PAY 18.54 2.09B 1.4x 10.0x

Visa Inc V 74.17 143.24B 12.7x 18.4x

Average 4.9x 15.0x

Median 4.1x 17.3x

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Software Ticker Stock Price Market Cap EV / Revenue EV / EBITDA

Benefitfocus, Inc. BNFT 38.12 1.10B 5.7x -

Intuit INTU 111.61 29.86B 7.3x 31.7x

SS&C Technologies Holdings, Inc. SSNC 28.08 5.32B 7.7x 24.3x

Workday, Inc. WDAY 74.67 14.32B 10.9x -

Sage Group plc SGE 9.37 10.06B 4.8x 20.1x

Paycom Software, Inc. PAYC 43.21 2.47B 11.0x 56.5x

Paylocity Holding Corporation PCTY 43.20 2.20B 13.6x -

Envestnet, Inc. ENV 33.31 1.28B 3.6x 32.5x

Financial Engines, Inc. FNGN 25.87 1.38B 3.3x 17.2x

Xero Limited. XRO 12.39 1.69B 11.2x -

Average 7.9x 30.4x

Median 7.5x 28.0x

Processing and Outsourcing Ticker Stock Price Market Cap EV / Revenue EV / EBITDA

ADP ADP 112.01 11.08B 4.4x 10.8x

Diebold, Inc DBD 24.83 1.61B 0.8x 15.9x

Fidelity National Information Services FIS 73.68 21.75B 4.9x 18.2x Inc.

Fiserv, Inc. FISV 108.73 25.02B 5.7x 17.3x

Jack Henry & Associates JKHY 87.27 6.98B 5.6x 16.1x

Average 4.3x 15.6x

Median 4.9x 16.1x

All data and stock prices as of June 30, 2016 market close.

Source: PitchBook, Raymond James

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M&A Spotlight

Mercury UK Holdco Ltd. to Acquire ISP Processing for $1. 2 Billion

May 5, 2016 – Mercury UK Holdco Limited has announced that it has signed a definitive agreement to acquire ISP Card for $1.2 billion in a combination of debt and equity, and the transaction is expected to close by the end of 2016.

Mercury UK Holdco Limited is a UK incorporated company which is the and majority shareholder of Istituto Centrale delle Banche Popolari Italiane S.p.A. (ICBPI). It is owned by funds managed by Advent International, Bain Capital and Clessidra. Furthermore, it provides accounting, treasury and bond reporting services.

ISP Processing is the combination of Setefi Processing and ISP Card of Intesa Sanpaolo, Italy’s largest commercial bank. While Setefi Processing is the Italian payment processing platform of Intesa Sanpaolo, ISP Card is the payment processing platform of Intesa Sanpaolo’s Central and Eastern European business.

Commenting on the announcement, Luca Bassi, Managing Director of Bain Capital Private Equity, said, “This transaction is strategically important as it adds Italy’s leading commercial bank to our customer portfolio and gives us exciting capabilities to increase services and innovation across customers of both ICBPI and ISP Processing.”

Jeff Paduch, Managing Director of Advent International added, “This acquisition builds even further on our strong position in the payments industry both in Italy and globally and in partnering with leading banks to maximize the potential of their payments assets. We look forward to building a long-term relationship with Intesa Sanpaolo.”

Source: https://www.adventinternational.com/mercury-uk-holdco-limited-to-acquire-the- payment-processing-platforms-of-intesa-sanpaolo/

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Tech Mahindra to Acquire Target Group for $162 Million

May 27, 2016 – Tech Mahindra announced that it has entered into an agreement to acquire Target Group for roughly $162 million and is expected to close in the second quarter of 2017.

Tech Mahindra provides IT services which include solution integration services, application development and management, consulting services, managed services and infrastructure management services. Its consulting services include strategy planning, assessment, procurement and re-engineering solutions as well as planning, audits and best practices.

Target Group, a leader in Business Process Outsourcing, is a provider of software and business process outsourcing to major financial services, insurance and broker clients. The company’s FinTech platform provides BpaaS (Business Process as a Service) in lending and investment products and serves major financial institutions such as Goldman Sachs and Morgan Stanley.

Through this acquisition, Tech Mahindra is expecting to expand its offerings, cross-sell and enter new markets. Acquiring Target Group would lead to Tech Mahindra becoming one of the top 3 processors in the UK Financial Services for lending and investment products.

According to CP Gurnani, Managing Director and Chief Executive Officer of Tech Mahindra, “Target Group’s strong IP and disruptive proprietary platform significantly enhances our Fintech offerings. This acquisition will make us a formidable player in the UK BFSI market with over 50 major financial institutions as clients. The acquisition lies at the confluence of several of our strategic priorities – add IP, double BFSI revenue and expand European footprint. We look forward to welcoming Target Group’s employees into the Tech Mahindra family.”

Source: http://www.techmahindra.com/media/press_releases/Tech-Mahindra-to-acquire- Target-Group-to-augment-Platform-BPaaS-offerings-in-BFSI.aspx

EV / Revenue: 2.6x (PitchBook)

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BM&F Bovespa to Acquire Cetip for $3.3 Billion

April 8, 2016 – BM&F Bovespa announced that it is planning to acquire Cetip for $3.3 billion in a combination of cash and stock.

BM&F Bovespa offers trading systems for equities, fixed-income securities, equity derivatives, financial derivatives, spot U.S. dollar, and commodities.

Cetip is Latin America’s largest depository of fixed-income securities and also offers electronic trading, trade registration, custody, financial settlement, securities distribution, collateral management, and product development services.

According to BM&F Bovespa, this acquisition will create a world-class company that is ready to compete in a more challenging market and allow BM&F Bovespa to extend dominance over financial markets in Brazil. Furthermore, it will strengthen the company’s business model, increase revenue diversification and significantly reduce operating costs and risks.

In a joint statement, the companies said, “This combination of talent and strengths will represent an unparalleled milestone in the development of the Brazilian financial and capital markets, giving rise to a world-class market infrastructure company of high systemic importance and prepared to compete in an increasingly sophisticated and challenging global marketplace.”

Edemir Pinto, Chief Executive Officer of BM&F Bovespa, stated, “Together, BM&FBOVESPA and Cetip have become a much larger company than the of their parts, with substantial benefits for the users of the services of both. The integration of activities significantly reinforces the business model of the new company, making it more comprehensive for facing a dynamic and internationally more competitive market environment.”

Source: http://www.wsj.com/articles/brazils-bm-f-bovespa-to-acquire-cetip-1460158438 , http://www.bmfbovespa.com.br/en_us/bm-fbovespa/press/recent-releases/bm-fbovespa- and-cetip-announce-agreement-to-combine-operations.htm

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Blackboard Affiliate to Acquire Higher One for $260 Million

June 30, 2016 – Blackboard Inc., a provider of custom software that helps students collaborate on assignments and communicate with teachers, announced that its parent company, Providence Equity Partners, has entered into a definitive agreement to purchase Higher One Holdings, Inc. (ONE) for $5.15 in cash per share ($260 million). This price represents a 37.3% premium over Higher One’s closing share price on June 29, 2016, and the transaction is expected to close in the third quarter of 2016.

Higher One, Inc. is a leading payments technology provider for higher education that provides student refunds, on-campus and community purchases and payroll and employee expenses. The company supports over 700 colleges and more than 5 million students throughout the United States.

This acquisition will allow for collaboration between Higher One’s and the Blackboard Transact business in order to create new solutions for educational institutions and its users. While CASHNet provides software that automates electronic payments, Blackboard Transact provides transaction, security and financial solutions. This collaboration will also help Blackboard expand its capacity to handle payments.

David Marr, Senior Vice President of Blackboard Transact, stated, “CASHNet is a natural complement to Blackboard’s broad portfolio of campus financial solutions. As part of its mission, Blackboard is focused on supporting institutions in their efforts to enable fundamental access to education. Providing students and parents with a comprehensive set of tools that assist them in managing tuition payments is a critical piece of the access equation.”

News : http://www.businesswire.com/news/home/20160630005403/en/Higher- Announces-Sale-Blackboard-Affiliate-5.15-Share, FT Partners

EV / Revenue: 1.5x (PitchBook)

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About Solganick

Solganick & Co., Inc. is an independent investment banking and M&A advisory firm focused exclusively on the global Software, IT Services and Digital Media industry sectors. We advise buyers and sellers of companies and efficiently execute M&A transactions that help increase shareholder value. Our professionals have advised on $20+ billion in M&A transactions to date and have current clients and relationships globally with entrepreneurs, companies and leading private equity firms within the sectors we cover.

Please contact us for information regarding this report or to inquire about an M&A transaction.

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