Total UK fintech investment hit $7.3 billion in H1 2024, up from $2.5 billion in the same period in 2023, according to KPMG’s latest Pulse of Fintech report, a bi-annual report on fintech investment trends published today.
Despite the almost threefold increase, geopolitical uncertainty, high levels of inflation and the high interest rate environment have all contributed to more subdued levels of UK fintech investment, compared to the record highs experienced in 2021.
H1 2024’s investment total was strengthened significantly by the size of many of the deals, including the $4 billion buyout of financial software company IRIS Software Group by Leonard Green, a $999 million VC round by small business-focused marketplace platform Abound, and a $621 million raise by neobank Monzo.
Taking out H1 2024’s outlier results, such as the IRIS Software Group deal, UK fintech investment fell to $1.8 billion in H1 2024.
198 UK M&A, PE and VC fintech deals were completed in H1 2024, down from 284 in H1 2023.
Despite the fall in the total number of deals, the UK remains the centre of European fintech investment, with British fintechs attracting more funding than their counterparts in the rest of EMEA combined.
The Europe, Middle East and Africa (EMEA) region saw total fintech investment drop considerably in H1 2024, falling from $19.1 billion in H2 2023 to $11.4 billion in H1 2024.
The largest EMEA deals outside of the UK included the buyout of payments firm Banco BPM Gruppo for $652 million, and the acquisition of Switzerland based e-invoicing company Pagero by Thomson Reuters.
H1 2024 – Key Highlights
In the Americas, total investment fell from $38.5 billion to $36.7 billion between H2 2023 and H1 2024—including from $35 billion to $27.4 billion in the US— while in EMEA it fell from $19.1 billion to $11.4 billion, and in ASPAC it dropped from $4.6 billion to $3.7 billion.
Fintech deal volume in the Americas rose from 1,066 to 1,123 deals between H2 2023 and H1 2024—including from 866 to 916 deal in the US—while it rose from 406 to 438 deals in ASPAC; deal volume dropped in the EMEA region from 804 to 689 deals.
Global M&A deal value was $32.6 billion across 264 deals globally in H1 2024. The Americas attracted $26.8 billion across 130 deals, EMEA attracted $5.5 billion across 102 deals, and ASPAC attracted $310 million across 31 deals.
Global VC investment was $18.3 billion in H1 2024, of which the Americas saw $9.3 billion—including $7.6 billion in the US—EMEA saw 5.4 billion, and ASPAC saw $3.4 billion.
Global PE investment was just $979.5 million in H1 2024. The US accounted for all $568.9 million in PE investment in the Americas, while EMEA saw $402.8 million, and ASPAC saw just $7.8 million.
Corporate CVC investment accounted for $8.5 billion in VC investment in H1 2024, including $4.4 billion in the Americas ($3.6 in the US), $2.23 billion in the EMEA region, and $1.7 billion in ASPAC.
“With the new UK government in situ and the potential long awaited drop in interest rates having finally arrived, there are hopes that fintech investment will start to show signs of recovery as we move into the latter part of the year and early 2025,” says Hannah Dobson, Partner and UK Head of Fintech at KPMG UK.
“We are expecting to see growing investment interest in AI and its use in the fintech and regtech space. Regulation remains a key focus in the EU – particularly with crypto and digital asset businesses as they navigate the new EU’s Markets in Crypto Assets (MiCA) regulation, which is expected to arrive in December 2024.”
“The high cost of capital and geopolitical uncertainty – linked to conflict and elections, have put a significant damper on all global investments so far this year, and the fintech market isn’t immune to that,” continues Karim Haji, UK and Global Head of Financial Services at KPMG.
“Investors are acting cautiously, and not only when it comes to large transactions. On the M&A front, in particular, given concerns about valuations and the profitability of potential targets, investors are focussed on improving the companies they already own rather than buying new.”
The post UK fintech investment triples, rest of world still in decline appeared first on Payments Cards & Mobile.