FINTECH SECTOR REPORT June 2018 BROAD AND DEEP FINTECH PRACTICE GCA has created a unique, interdisciplinary team of senior bankers across FinTech, Software, Private Capital and M&A to serve virtually all sub-sectors and business models across the FinTech market SELECTED BLUE CHIP STRATEGIC DEEP & EXPERIENCED GCA TEAM SECTOR COVERAGE & FINANCIAL CONTACTS Strategic Acquirers Banking Technology +20 Senior U.S. Bankers Blockchain / Crypto Insurance Technology Dedicated M&A +5 Professionals Investment & Wealth Technology Online / Alternative Lending +5 Private Capital Professionals Payments / Billing / Money Transfer GCA’S EXTENSIVE TRANSACTION Real Estate & Mortgage Technology Private Equity / VC EXPERIENCE Regulatory Technology Transactions +350 since 2015 Trading & Capital Markets Technology M&A / private BUSINESS MODEL COVERAGE placement transactions +90 with $12Bn+ in deal Information value since 2010 SaaS and Balance Services / Transaction Enterprise Sheet Data & Processing Software Driven Analytics 2 GCA FINTECH TEAM Strong sector and product expertise across FinTech and related sub-sectors Sean Minnihan Paul DiNardo Chris Gough Rob Freiman Kegan Greene Managing Director Managing Director Managing Director Director Director Head of FinTech Head of Software Real Estate & Mortgage Tech FinTech/Payments FinTech/InsurTech Phone: (212) 999 - 7077 Phone: (212) 999 - 7097 Phone: (415) 318 - 3658 Phone: (212) 999 - 7075 Phone: (415) 318 - 3686 Mobile: (917) 364 - 6230 Mobile: (650) 483 - 7246 Mobile: (415) 385 - 9427 Mobile: (973) 229 - 0436 Mobile: (917) 579 - 4838 [email protected] [email protected] [email protected] [email protected] [email protected] Selected Recent FinTech Experience Sold Sold majority stake to Acquired Acquired by Acquired by Acquired by Tender Offer for To Asahi Fire & Marine Insurance Co. We Advised Risk International We Advised Principal We Advised CHX Fairness Opinion to Clearent We Advised FieldEdge We Advised BlackFin We Advised Asahi (close pending) Insurance Technology Investment Technology Liquidity Venues Payments Financial SaaS Insurance Technology Insurance Technology Sale of Acquired by Financing from Majority sale to Growth Investment Strategic Investment To We Advised WorkMarket We Advised RGI Shareholders We Advised Radius We Advised Skyslope Financial Advisor Financial Advisor We Advised ControlExpert Financial SaaS Insurance Technology Payments Real Estate Tech Banking & Lending Tech Payments Insurance Technology Growth Investment Acquired by Acquired by Acquisition of Acquisition of Acquired by Acquired by from We Advised Vindicia We Advised Commissions Inc We Advised Capsilon We Advised TSYS We Advised Blucora We Advised AWL We Advised PayMetric Payments Real Estate Tech Real Estate Tech Payments Investment Technology Insurance Technology Payments 3 FINTECH DEAL DASHBOARD FinTech is trading at 25% on an LTM basis vs. 12% for the S&P 500. Financing volume 1H ‘18 significantly exceeds 1H ’17 volume due largely to Ant Financial deal; volume is on par excluding the Ant Financial deal. M&A volume 1H ‘18 is well above 1H ’17 volume $39 Bn | 1,480 Deals $123 Bn | 786 Deals Industry Stock Market Performance LTM Financing Volume (1) LTM M&A Volume Select June Financing Transactions Percent Change (2) Select June M&A Transactions Date Company Selected Investors Amount Sub-Sector Subsector LTM 3 Years Date Target Buyer Value Sub-Sector 6/27/18 $53 6 1 Banking & Lending Technology 32% 75% 6/22/18 $120 4 6/25/18 $200 5 2 Benefits Administration/Payroll 30% 68% 6/19/18 $4,900 9 6/6/18 $114 4 3 Financial SaaS 36% 72% 6/19/18 $400 9 6/5/18 $103 3 4 Information Services 17% 44% 6/14/18 $1,000 2 6/5/18 $45 9 5 Insurance Technology 28% 57% 6/11/18 $1,550 3 6/4/18 $392 94 6 Investment Technology 16% 42% 6/7/18 $250 9 Card Services (1) Quarterly Financing Activity ($Bn) 7 Liquidity Venues 8% 19% Quarterly M&A Activity ($Bn) 8 Payments 41% 77% 377 397 378 397 $19 235 9 Real Estate & Mortgage Tech. 11% 43% 223 369 222 368 201 216 328 308 10 Trading Technology 27% 58% 195 192 155 $32 $9 $46 $7 $8 $24 $23 $28 $6 $5 $17 $4 $4 Aggregate FinTech Market 25% 55% $14 $13 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 (3) Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 $69.7 $97.9 $58.6 $148 $76.2 $240 $231 $182 $12.2 $10.8 $23.9 $12.6 $18.5 $19.4 $18.3 $61.7 S&P 500 12% 32% Average Deal Size ($MM) Average Deal Size ($MM) Notes: Source: Pitchbook. CapIq. GCA Deal Database. Market data as of 6/30/18 4 (1) Includes private company equity financings. (2) Represents weighted average by market cap. (3) Q2-18 data includes Ant Financial’s $14Bn raise. FINTECH PUBLIC COMPANY LANDSCAPE FinTech sub-sectors and key operating stats ($Bn) 1 Banking & Lending Technology 2 Benefits Administration/Payroll 3 Financial SaaS Combined Market Cap: $200 Combined Market Cap: $103 Combined Market Cap: $128 18/17 Rev. Growth: 9% 18/17 Rev. Growth: 8% 18/17 Rev. Growth: 20% 18 EBITDA Margin: 26% 18 EBITDA Margin: 22% 18 EBITDA Margin: 21% 4 Information Services 5 Insurance Technology Combined Market Cap: $349 Combined Market Cap: $36 18/17 Rev. Growth: 8% 18/17 Rev. Growth: 10% 18 EBITDA Margin: 32% 18 EBITDA Margin: 11% Notes: 5 Source: CapIq. Revenue growth and EBITDA margins shown are median values for comp group. Market data as of 6/30/18. FINTECH PUBLIC COMPANY LANDSCAPE FinTech sub-sectors and key operating stats ($Bn) 6 Investment Technology 7 Liquidity Venues 8 Payments Combined Market Cap: $273 Combined Market Cap: $256 Combined Market Cap: $955 18/17 Rev. Growth: 10% 18/17 Rev. Growth: 8% 18/17 Rev. Growth: 10% 18 EBITDA Margin: 28% 18 EBITDA Margin: 59% 18 EBITDA Margin: 28% 9 Real Estate & Mortgage Tech. 10 Trading Technology Combined Market Cap: $240 Combined Market Cap: $126 18/17 Rev. Growth: 8% 18/17 Rev. Growth: 22% 18 EBITDA Margin: 19% 18 EBITDA Margin: 51% Notes: 6 Source: CapIq. Revenue growth and EBITDA margins shown are median values for comp group. Market data as of 6/30/18. FINTECH STOCK PRICE PERFORMANCE Payments leads the FinTech pack on both an LTM and three year basis LTM Share Price Performance 3 Year Share Price Performance 1) Banking & Lending 2) Benefits 3) Financial SaaS 4) Information 5) Insurance 6) Investment 7) Liquidity Venues 8) Payments 9) Real Estate & 10) Trading Technology Administration/Payroll Services Technology Technology Mortgage Technology Technology Notes: 7 Source: CapIq. Market data as of 6/30/18. FINTECH PUBLIC COMPANY VALUATION Financial SaaS and Liquidity Venues outperform the FinTech market on both an EV / LTM revenue and EV / NTM revenue basis Enterprise Value / LTM Revenue Enterprise Value / LTM Revenue 4.4x 4.7x 3.1x 3.1x Enterprise Value / NTM Revenue Median NTM Revenue Growth to EV / NTM Revenue Multiple 3 5 2 1 4.2x 4.1x 9 8 3.6x 3.1x 10 6 4 7 1) Banking & Lending 2) Benefits 3) Financial SaaS 4) Information 5) Insurance 6) Investment 7) Liquidity Venues 8) Payments 9) Real Estate & 10) Trading Technology Administration/Payroll Services Technology Technology Mortgage Technology Technology Notes: 8 Source: CapIq. Market data as of 6/30/18. Lines display median multiples across comp groups for given year. FINTECH PUBLIC COMPANY VALUATION (CONT’D) Financial SaaS outperforms on both an EV / LTM EBITDA and EV / NTM EBITDA basis Enterprise Value / LTM EBITDA Enterprise Value / LTM EBITDA 21.0x 15.7x 12.1x 11.7x Enterprise Value / NTM EBITDA Median NTM EBITDA Growth to EV / NTM EBITDA Multiple 3 5 14.0x 14.4x 9 1 11.1x 11.4x 10 2 8 6 4 7 1) Banking & Lending 2) Benefits 3) Financial SaaS 4) Information 5) Insurance 6) Investment 7) Liquidity Venues 8) Payments 9) Real Estate & 10) Trading Technology Administration/Payroll Services Technology Technology Mortgage Technology Technology Notes: 9 Source: CapIq. Market data as of 6/30/18. Lines display median multiples across comp groups for given year. FINTECH PUBLIC COMPANY VALUATION (CONT’D) Long-term growth is not necessarily correlated with FinTech public company P/E multiples or PEG ratios 2018 P/E Ratio PEG Ratio Long-Term EPS Growth 1 Banking & Lending Tech 29.8x 2.4 14% 2 Benefits Admin/Payroll 28.0x 1.8 21% 3 Financial SaaS 27.3x 1.9 20% 5 Insurance Technology 26.2x 3.0 15% 4 Information Services 23.3x 2.5 10% 9 Real Estate & Mort. Tech 23.1x 1.4 17% 6 Investment Technology 22.6x 1.6 13% 7 Liquidity Venues 20.8x 2.2 10% 8 Payments 20.1x 1.5 15% 10 Trading Technology 17.0x 1.0 21% 0.0x 5.0x 10.0x 15.0x 20.0x 25.0x 30.0x 35.0x Notes: 10 Figures represent medians of sub-sectors. Market data as of 6/30/18. Long-term EPS growth covers last 5 years. SELECTED RECENT GROWTH EQUITY & VC ACTIVITY Date Announced Target Investors Type Amount ($MM) Sub-Sector 6/29/18 Thiel Capital Series D $30 Trading Technology Daiwa Securities Group, MORI TRUST, Norinchukin Bank, SBI Investment, Tokio 6/28/18 Series A $30 Liquidity Venues Marine Holdings, Ueda Yagi Group 6/28/18 Technology Crossover Ventures Growth Equity $20 Trading Technology 6/27/18 Resona Group, Sumitomo Mitsui Banking Corp, Tokai Tokyo Financial Holdings Series E $53 Investment Technology 6/27/18 Insight Venture Partners VC $20 Real Estate & Mortgage Tech. 6/26/18 GGV Capital, Tao Zhang, Temasek Holdings, Tony Fadell, Wavemaker Partners Series B $20 Information Services 6/26/18 Xinyongbao Saison Ventures Series B $32 Information Services Founders Fund, Kevin Systrom, Kinnevik, Lakestar, Nat Turner, Sound Ventures, 6/25/18 Series B $36 Payments Thrive Capital 6/25/18 Info Edge, Softbank Capital Series F $200 Insurance Technology 8 Decimal Capital, Arrington XRP Capital, Bibox, Hyperchain Capital, JRR Crypto, 6/22/18 VC $40 Trading Technology Link Capital, Nirvana Capital, Signum Capital 6/22/18 9C Capital, Jiuzhou Jianyuan, Will Hunting Capital Series B $15 Insurance Technology 6/21/18 Felicis Ventures VC $50 Financial SaaS Cincinnati Financial, CSAA Insurance Group, Nephila Capital, State Auto Labs, 6/21/18 Series B $17 Insurance Technology The Hartford, XL Innovate 6/21/18 Accel, Sequoia Capital, Wing Venture Capital, Y Combinator Series A $15 Banking & Lending Technology 6/21/18 BNP Paribas, ING Ventures, Kistefos Venture Capital, Tech Mahindra Series A $16 Trading Technology BDC Venture Capital, J.P.