5 hours ago · 2 min read
Social trading platform eToro to go public via $10 billion SPAC IPO
The combined company’s estimated valuation is currently $10.4 billion.
Crypto-friendly “social trading and investing” platform eToro will become a publicly-traded firm by merging with FinTech Acquisition Corp. V (FinTech V), according to a press release shared with CryptoSlate today.
“Today marks a momentous milestone for eToro as we embark on our journey to become a publicly-traded company with Betsy Cohen and the team at FinTech V. I want to express my gratitude for the passion, hard work, drive and determination of all of the eToro team members over the past 14 years who have helped make this a reality,” said Yoni Assia, CEO of eToro.
Launched in 2007, eToro introduced a novel concept of “social trading” which allows traders to “copy people” and follow their deals. It currently has over 20 million registered users and “its social community is rapidly expanding.”
As a publicly-traded firm, FinTech V will act as a “special purpose acquisition company” (SPAC) that will acquire eToro. The process is akin to a reverse merger where the publicly-traded buyer effectively “morphs” into the acquired firm, with the latter inheriting its status.
What is a SPAC?
Notably, a SPAC is not a real firm but more of a shell company—or “nothing more than a group of people holding capital with the intention of investing it in the future,” as eToro put it. When the transaction is completed, the combined company “will operate as eToro Group Ltd. and is expected to be listed on NASDAQ,” the press release added. This also means that FinTech V’s current ticker FTCV will be changed to eToro’s.
“As a pioneer in the evolution of SPACs, Fintech Masala, our sponsor platform, seeks out companies with outsized growth, effective controls and excellent management teams. eToro meets all three of these criteria,” added Betsy Cohen, FinTech V’s chairman.
The deal will also include $650 million in equity (at $10 per common share) distributed via private placement—a kind of “closed sale” for strategic and institutional investors. The buyers will include ION Investment Group, Softbank Vision Fund 2, Third Point LLC, Fidelity Management & Research Company LLC, and Wellington Management.
The SPAC is expected to have around $800 million on its balance sheets “to support future growth.” At the same time, since the resulting public company will be mostly eToro, the trading platform’s shareholders, current investors, and employees will retain around 91% ownership of the entity.
The SPAC IPO will tentatively take place “close in the third quarter of 2021,” the release added.