COVID-19 sparks digital investment boom in UK fintech

• UK fintechs attracted $24.5 billion investment in H1’21 across the highest volume of deals on record
• Global fintech reached a record $98 billion in H1’21 up from $87.1 billion in H2’20
• EMEA saw over $39 billion invested with the UK leading followed by the Nordic region ($4.8 billion)

The UK saw a staggering $24.5 billion of fintech investment (M&A, PE and VC) in the first half of 2021, according to KPMG’s Pulse of Fintech, a bi-annual report on fintech investment trends published today (10 August).

The UK’s total was second only to the US ($42.1 billion) and over four times the level of investment seen in the UK through the entirety of 2020 ($5.9 billion). The investment total was boosted by the $14.8 billion Refinitiv deal and the record volume of deals completed – 283 – the most since the report began. In particular, VC investment surged with fintech-focused VC investment in the UK reaching $6.2 billion, more than double what we saw in H2’20.

Karim Haji, EMA and UK Head of Financial Services, KPMG, says: “UK fintechs attracted significantly more funding than their counterparts in the rest of EMEA combined. COVID-19 has spurred a race to digital in UK financial services and many of the major banks have dipped into their investment pots for digitalisation – a major reason we are seeing so much corporate investment. This timing, together with the UK’s reputation as a historic financial services sector and ongoing work to nurture fintechs, from testing through to listing, makes the UK a magnet for investment.

“The picture across EMEA is also incredibly positive with $39 billion invested in the first six months, that’s already $14 billion more than the whole of 2020. It’s also promising to see a wider mix of countries attracting big investments with $100 million+ VC funding rounds in the Netherlands, France, Austria, the Czech Republic and Saudi Arabia.”

Globally, fintech investment surged from $87.1 billion in H2’20 to a record $98 billion in H1’21.  Dry powder cash reserves, increasing diversification in hubs and subsectors, and strong activity across the world contributed to the record start. Fintech valuations remained very high in H1’21 – a likely driver in the explosion of unicorn births with 163 created in the first half of the year.

“Overall investment in fintech surged to a record high in the first half of 2021 as investors, particularly corporates and VC investors, made big bets on market leaders in numerous jurisdictions and across almost all subsectors,” said Ian Pollari, KPMG’s Global Fintech Co-Lead.  “Large funding rounds, high valuations and successful exits underscore the thesis that digital engagement of customers that accelerated during the pandemic is here to stay.”

 

ENDS

 

H1’21— global Highlights

• Global fintech investment saw 2,456 deals in H2’21 – far outpacing last year’s annual total of $121.5 billion across 3,520 deals.
• M&A deals continued at a very healthy pace, accounting for $40.7 billion across 353 deals in H1’21, compared to $74 billion across 502 deals during all of 2020.
• Late-stage venture valuations more than doubled year-over-year, with global median pre-money valuations for late stage deals rising from $135 million in 2020 to $325 million at the end of H1’21.
• Corporate-participating investment in fintech was incredibly strong in H1’21, with US$20.8 billion of investment globally. Both the Americas (US$13 billion) and EMEA (US$5 billion) saw record levels of CVC investment.
• Global investment in cybersecurity reached a new annual record at mid-year—rising from US$2.2 billion in 2020 to US$3.7 billion in H1’21.
• Cross-border M&A deal value rose dramatically, from $10.3 billion during all of 2020 to $27.7 billion in H1’21 alone.
• PE firms embraced the fintech space in H1’21, contributing $5 billion in investment to fintech— surpassing the previous annual high of $4.7 billion seen in 2018.
• Total fintech investment in the Americas was very robust with US51.4 billion in investment across 1,188 deals. 
• Americas accounted for over half the global investment at $51.4 billion
• Investment in Asia Pacific rebounds to $7.5 billion from 4.7 billion in H2’20
• The EMEA region saw US$39.1 billion in fintech investment in H1’21, including a record US$15.1 billion in VC funding.
• Fintech investment in the Asia-Pacific region continued at a more moderate pace, reaching $7.5 billion across 467 deals, compared to $13.4 billion across 714 deals during all of 2020. 

 

See the full report online here: https://assets.kpmg/content/dam/kpmg/xx/pdf/2021/08/pulse-of-fintech-h1.pdf

 

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About KPMG

KPMG LLP, a UK limited liability partnership, operates from 21 offices across the UK with approximately 16,000 partners and staff.  The UK firm recorded a revenue of £2.3 billion in the year ended 30 September 2020.

KPMG is a global organisation of independent professional services firms providing Audit, Legal, Tax and Advisory services. It operates in 147 countries and territories and has more than 219,000 people working in member firms around the world. Each KPMG firm is a legally distinct and separate entity and describes itself as such. KPMG International Limited is a private English company limited by guarantee. KPMG International Limited and its related entities do not provide services to clients.