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Alternative Market Briefing

Global fintech investments reach $135.7bn across 2,693 deals: KPMG

Wednesday, February 26, 2020

Laxman Pai, Opalesque Asia:

Global fintech investment fell short of 2018's record year, with $137.5 billion invested across 2,693 deals in 2019 compared to $141 billion in 2018, said a report.

According to the Pulse of Fintech H2, a report by KPMG, global fintech M&A rose from $91 billion in 2019 to a record-high of $97.3 billion in 2019, despite a strong drop in the number of M&A deals from 622 to 426.

Despite concerns related to Brexit and ongoing trade tensions between China and the US, cross-border transactions remained high with $54.2 billion in cross-border M&A deal value across 138 deals.

This focus on cross-border transactions will likely continue as maturing fintechs look to grow and achieve scale and the big tech giants look to extend their reach and gain market share in less developed markets.

Many niche areas of fintech continued to grow and evolve throughout 2019; in particular, proptech (real estate tech) investment grew from $1.9 billion in 2018 to a record of $2.6 billion in 2019, while fintech-focused cybersecurity investment more than doubled from $316.9 million to $646.2 million.

Blockchain and cryptocurrency investment continued to fluctuate, falling from $6.3 billion to $4.7 billion year-over-year, although Facebook's announcement of Libra and the People's Bank of China's announcement of accelerated research and experimentation on digital currency and electronic payments have helped breathe new life into space.

Global corporate VC investment participation rose during every quarter of 2019, leading to $16.7 billion in total annual VC invested with CVC involvement; CVC-related deal volume was also robust, with 553 deals over 2019, including 166 in Q3'19 - the second-highest quarter ever in terms of CVC fintech deals volume after Q2'18.

The number of fintech deals by global tech giants - including Alibaba Group, Alphabet, Apple, Baidu, IBM, Microsoft, and Tencent - increased for the fifth straight year, with $3.5 billion invested across 46 deals in 2019.

Cybersecurity related fintech investment more than doubled year-over-year, from $316.9 million to $646.2 million.

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