July 2018 Financial Technology MARKET UPDATE M&AMARLIN & ASSOCIATES INVESTMENT BANKING AND STRATEGIC ADVISORY TO THE FINANCIAL TECHNOLOGY AND INFORMATION SERVICES INDUSTRIES New York Washington, D.C. Toronto Financial Technology Financial www.MarlinLLC.com © Marlin & Associates Holdings LLC, All Right Reserved DEAR CLIENTS AND FRIENDS, FinTech: The End of the Beginning - Our July 2018 Fintech Market Update Dear Clients and Friends, Our latest FinTech m&a report can be found below. It highlights m&a trends and transactions in the seven segments of the FinTech world that we follow and sometimes lead. Recently Capgemini, the consulting, technology and outsourcing services company, in collaboration with Efma, a global non-profit organization, issued its second annual World FinTech Report. The authors may not have intended their report to call the “End of the Beginning” of consumer FinTech, but that is what they have done – and we agree. The Beginning is over. The Future is before us. Consumer-oriented Fintech isn’t new. We started replacing human bank tellers with technology in the 1960s (ATMs); stock brokers in the 1980s (E*TRADE and other on-line brokers); PayPal was founded almost 20 years ago. Betterment and other robo-advisors began replacing wealth managers a decade ago; 15 years ago Prosper, Funding Circle and other Peer-to-Peer lenders did the same to bankers. A few things are new: one is the sheer number of consumer FinTech apps that have proliferated - combined with the speed of adoption, both of which surprised many in the industry. Another is the aggressive (if belated) response by many “traditional” firms. Suddenly, the “hunted” are becoming the hunters, as firms like American Express, Citi, Goldman Sachs, JP Morgan, MasterCard, Visa and others invest in technology, acquire, integrate and offer the sorts of “…quick, convenient, seamless … efficient, portable, and delightful…” financial services that consumers – and businesses - have come to expect. And to them we now add BigTech firms like Alibaba, Facebook, Google, Oracle, TenCent, and WeChat. As Capgemini noticed – and we talked about in our October 2017 Report - FinTech is increasingly BigTech. All this has given new impetus to companies that sell “tools” to allow clients to compete in this brave new world. The disrupters are far from dead and the incumbents are far from safe. There is plenty of room for both. And both are finding growth more expensive and profitability more challenging than they had assumed. (See for example CAN Capital, OnDeck and Lending Club – or, if you prefer, try to find Beepi, Dealstruck, or Pay By Touch.) The smart ones (old and new) have realized that success requires more than technology. It also requires knowledge of pain points, trust building, brand building, customer centricity, a sustainable organization – and a lot of money. This is certainly not the beginning of the end for the innovators in Consumer FinTech; but it’s is clearly the End of the Beginning. We provide unbiased expert counsel to those who would buy, sell, raise capital or invest in excellent middle-market FinTech firms. It’s a good place to be. Many recent transactions are discussed in the report found below. A few of the more interesting ones include: • PayPal (NASDAQ:PYPL) agreed to acquire HyperWallet for • Nets (Ballerup, Denmark) agreed to acquire a majority stake $400mm, in Dotcard for PLN 255mm (~$85mm), • Dataminr (New York, NY) raised $392mm in funding at an • LendingPoint (Kennesaw, GA) raised $53mm in a debt implied valuation of $1.6bn from new investors including funding round from Paragon Outcomes. Morgan Stanley, • Deutsche Börse (XTRA:DB1) agreed to acquire GTX ECN from GAIN Capital Holdings for $100mm, valuing the company at an implied 4.35x LTM revenue, Please see our July Fintech M&A Update below. Sincerely, Kenneth B. Marlin | Managing Partner Marlin & Associates | www.marlinllc.com Marlin & Associates is one of the most active firms advising buyers and sellers of U.S. and international middle-market firms that provide software, data, and related services. The firm is based in New York City, with offices in Washington, D.C., and Toronto, Canada. It has been the recipient of numerous awards including “Boutique Investment Bank of the Year,” “Middle-Market Investment Bank of the Year,” "Middle-Market Financing Agent of the Year – Equity," and “TMT Advisory Bank of the Year.” Marlin & Associates' team of professionals has advised over 200 information-technology transactions. JULY 2018 MARLIN & ASSOCIATES: FINTECH MARKET UPDATE Financial Technology is a complex industry that serves a wide range of customers, including retail, commercial, merchant and investment banks; asset managers; insurance companies; securities exchanges; corporations (treasurers and CFO’s); merchants (payments); and a host of other financial services industry participants, consumers and intermediaries who interface with these financial institutions. 3 Marlin & Associates 8 Events 9 Sector Comparison 10 Sector Analyses 10 Banking Software & Processors 11 Capital Markets Software & Services 12 Data & Analytics – Financial Services 13 Insurance Technology 14 Payment Technology 15 Securities Exchanges 16 Technology-Enabled Financial Institutions 17 Case Studies JULY 2018 MARLIN AND ASSOCIATES: WHO WE ARE OUR SENIOR TEAM BRINGS EXTENSIVE DEPTH, BREADTH AND INDUSTRY EXPERTISE TO OUR CLIENTS Founder and Managing Partner of M&A • Twice named to II’s Tech 50 Chief Operating Officer of M&A • Member Market Data Hall of Fame • 20+ years of M&A experience advising • MD Veronis Suhler Stevenson technology and PE firms, globally • CEO of Telesphere Corporation • VP Business Development at FactSet • CEO of Telekurs (NA) • M&A attorney of Skadden, Arps, Slate, • EVP Bridge Information systems Meagher and Flom • SVP at Dun & Bradstreet • CFO of JCF Group • BA from the University of California (Irvine) • MBA from Columbia Business School • MBA from UCLA, post-MBA from New • J.D. from Fordham Law School Ken Marlin York University • CFA Charterholder Jason Panzer • 18+ years of investment banking and • 18+ years of M&A experience private equity experience • VP of Business Development at • Named twice to Dealer’s Digest and SunGard recently M&A Advisor’s “40-Under-40” • Founder of software company sold to • Founded Marlin & Associates with Ken SunGard Marlin • Started career designing trading software • Formerly at Veronis Suhler Stevenson, for TD Bank Morgan Stanley, and American • BaSC, Engineering from University of International Group Toronto • BS from Binghamton University Michael Maxworthy Tom Selby Tom Selby • 18+ years of investment banking • 10+ years of technology investment experience banking experience • Formerly at Lehman Brothers, Bear • Experience working with both large Stearns and Houlihan Lokey corporations and entrepreneurial • MBA, University of Virginia (Darden); technology-based companies BS, Birla Institute of Technology & • Formerly at BNPParibas, Science • MBA, NYU Stern, MS from CentraleSupelec Anup Agarwal Sam Levy "The Marlin & Associates team was a highly valued player in completing our transaction. Their professional expertise and commitment to the process, preparation, positioning, presentation, and leadership got us to the finish line. They’re smart, available whenever needed, and bring the work ethic to get the deal done.” Roman Brunner CEO, QuoVadis Note: Not a complete list JULY 2018 OUR FOUNDING PARTNER HAS FIVE TIMES BEEN RECOGNIZED AS ONE OF THE MOST INFLUENTIAL PEOPLE IN FINANCIAL TECHNOLOGY “Deal making is as integral to the evolution of the financial technology industry as the technologies themselves and Ken Marlin has been in the thick of it...” – Institutional Investor 2014 . In 2011, Institutional Investor, the international publisher focused primarily on international finance, has named M&A’s Founding Partner, Ken Marlin, as one of Institutional Investor’s Tech 50, which honored the 50 most “disruptive” figures in the financial technology sector . Institutional Investor calls these 50 people disrupters because they're changing the way Wall Street does business . Ken was the only investment banker included on the list . In 2014, Institutional Investor again named Ken as one of the 50 most influential people in financial technology . Ken was, again, the only investment banker included on the list . In 2015, 2016, and 2017 Institutional Investor named Ken one of the “35 Most Powerful Dealmakers of 2016” . Institutional Investor calls these 35 people the influential financiers that accelerate financial start-up’s paths to commercialization Candidates were evaluated by four primary sets of attributes: achievements and contributions over the course of a career; scope and complexity of responsibilities; influence and leadership inside and outside the organization; and pure technological innovation. JULY 2018 PEER AND INDUSTRY GROUP RECOGNITION “We are always grateful to be recognized for our hard work, but we are more pleased that we are able to help our clients achieve the results that they seek.” Ken Marlin Founder and Managing Partner Boutique Investment Banking Firm of the Year (2014, 2015, 2016) - The M&A Advisor M&A Award USA TMT Advisory Firm of the Year (2012, 2015, 2017) – Acquisition International The M&A Advisor and The M&A Forum have recognized Marlin & Associates for excellence in multiple deal categories including: • Cross-Border Deal of the Year (2017)* • Cross-Border Boutique Investment Banking Firm of the Year (2016)* TMT Advisory Firm of the