OnDeck, RateSetter and Kabbage were the biggest acquisitions of alternative lenders in 2020
- 2020 has been a tough year for fintechs globally, with alternative lenders struggling to operate, borrowers becoming riskier, and retail investors wary of lending money.
- The struggles of alternative lenders have sparked a wave of consolidation, with three particularly notable deals.
- Insider Intelligence publishes hundreds of Fintech industry news, charts and forecasts with the Fintech Briefing. You can find out more about the subscription here.
This year has taken its toll on many fintechs around the world, with alternative lenders in particular struggling to operate as borrowers have become riskier and retail investors have become wary of lending money to consumers or businesses. through loan markets. The struggles of alternative lenders have sparked a wave of consolidation in the industry.
Three acquisitions were particularly notable in 2020 – below we take a look at each of them:
US-based OnDeck was acquired for just $ 90 million, a much lower value than when it went public in 2014. The alternative lender was bought by Enova in July after a turbulent start to the year: OnDeck reported worrying first quarter 2020 results in May, with a net loss of $ 59 million. He attributed the losses to an increase in loan delinquencies linked to the pandemic on his platform, which more than tripled at the end of April. In addition, OnDeck laid off an unknown number of employees. This likely enabled Enova to acquire the alternative lender at a steep discount: OnDeck was valued at $ 1.4 billion when it went public in 2014.
UK-based peer-to-peer (P2P) lender RateSetter has been bought by Metro Bank to increase the bank’s loan distribution. Rumors about the acquisition first surfaced in June and the deal was closed in September. RateSetter had struggled amid the pandemic, including a sharp drop in loaned volume on its platform, from £ 786m ($ 1.05bn) in 2019 to £ 329m ($ 419.9m) dollars) in November, which hurt revenues. At the same time, Metro Bank had been interested in the P2P sector for some time: it joined forces with Zopa in 2015 to finance, for example, the latter’s loans. By strengthening its unsecured loans, Metro Bank can potentially generate higher interest income because its interest rates are higher than other types of loans.
The American company Kabbage was bought by American Express, which could improve the latter’s lending solutions. The deal was first made public in August and, although the sum was withheld, the small business lender could have been worth as much as $ 850 million. As part of the deal, the full range of Kabbage products will be integrated into an online platform to help Amex’s small and medium-sized business (SME) customers better manage their cash flow and access the fund. bearing. Amex already offered a range of business tools, including business expense tracking through its app, but can now meet even more SME needs through acquisition: Kabbage Insights, for example, can analyze transactional data from companies. million Amex SMB customers to help them better manage cash flow.
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