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Trading Platform eToro to Go Public Via $10.4B SPAC Merger

Trading platform eToro will go public by merging with blank-check company Fintech Acquisition V.
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Trading platform eToro said Tuesday that it would go public by merging with FinTech Acquisition Corp. V FTCV, a special-purpose-acquisition company run by the banking entrepreneur Betsy Cohen, in a deal valued at $10.4 billion.

Shares of the Philadelphia blank-check company at last check were 15% higher at $12.27.

The company is expected to have an estimated implied equity value of about $10.4 billion at closing, reflecting an implied enterprise value for eToro of $9.6 billion.

The deal is expected to close in the third quarter.

It will include $250 million in gross proceeds from FinTech V’s cash in trust and a $650 investment from leading investors including Vision Fund 2, Fidelity Management & Research and Wellington Management.

The company is expected to have about $800 million net cash on its balance sheet.

The combined company will operate as eToro Group Ltd. and is expected to be listed on Nasdaq. 

eToro was founded in Israel in 2007.

"In the last few years, eToro has solidified its position as the leading online social trading platform outside the U.S., outlined its plans for the U.S. market, and diversified its income streams," Cohen said in a statement. 

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"It is now at an inflection point of growth, and we believe eToro is exceptionally positioned to capitalize on this opportunity.”

EToro said that in 2020 it added more than 5 million new registered users and currently has more than 20 million. 

The company generated gross revenue of $605 million in 2020, more than double (up 147%) the year-earlier figure. 

EToro offers zero-commission trading. But unlike U.S. firms, EToro doesn’t make money by selling its trading data to hedge funds. That business, called payment for order flow, is prohibited in Europe, Bloomberg reported.

Instead, eToro primarily pockets a spread between the price its pays for securities and the price it passes along to customers.

SPAC mergers have been surging in the past year. So far in 2021, 82% of total IPOs have been through SPAC mergers, according to SPAC Analytics.

Last month, online payment company Payoneer said it would go public through a merger with FTAC Olympus Acquisition FTOC, another SPAC run by Cohen, in a $3.3 billion deal.

In December, boutique investment bank Perella Weinberg Partners said it was going public through a merger with Cohen's blank-check company FinTech Acquisition Corp. IV.

eToro is considered a rival to the Robinhood financial app, which has sparked controversy over its decision to limit trading in highly leveraged stocks, such as GameStop  (GME) - Get GameStop Corporation Report

Last month, Bloomberg reported that Robinhood planned an IPO, possibly around May.