A cautious but optimistic sentiment is prevailing in the Fintech and Payment sector. Despite a subdued start in 1Q 2024, investors anticipate an uptick in M&A deal flow throughout 2024.

General Commentary & Highlights

• Deal volume of global fintech M&A deals remained subdued in Q1, with the number of deals dropping 15% in 1Q 2024 (compared to 1Q 2023).
• We expect an acceleration of deal activity through 2024 and we are already seeing evidence of this acceleration in North America and Europe.

North America: Evidencing Expanded  Fintech Deal Flows in Q1 '24

• North America rebounding from a market low in fintech deal activity in Dec 2024.
• We expect growth momentum established in Q1 to continue through 2024 culminating in growth vs. 2023.

Europe: Also Showing Signs of Rebound  with Q1 Ramping up from 2023 Trough

• 2024 deal activity trending on similar levels to 2023.
• But we expect an acceleration of activity in rest of 2024 as buyers and sellers align to a new normal of valuation.

APAC: Fintech M&A Remains Somewhat Subdued Thus Far in 2024

• Fintech M&A deal activity remains subdued in the Asia Pacific, including a 25% decline in number of transactions in Q1 2024 vs. 2023.
• China macro challenges expected to drive ongoing conservatism in this market, although markets such as Japan could see an increase in deal activity.

LATAM & MEA: Fintech M&A Remain Subdued, Facing More Macro-Headwinds

• Fintech in rest of the world (LATAM and MEA regions) is muted by macro headwinds including political instability and armed conflict, which is likely to continue in 2024.
• But the attractive fundamentals of these high-growth markets remains and a return to higher deal volumes will come quickly if the market reaches greater stability.

Fintech Deal of the Quarter: Capital One Acquires Discover

• Capital One + Discover will become the largest credit card issuer in the US market, accounting for 19% of the US credit card market.
• The acquisition will generate expense synergies of ~$1.5B in operating expenses and ~$1.2B in network expenses by 2027.
• The acquisition will drive cost of funding efficiency, cross-selling opportunity, and create an appealing opportunity for innovation by owning a national payment network that also has a strong international presence.

Please do not hesitate to contact Yuriy Kostenko at Yuriy@FlagshipAP.com or Alessandro Mighetto at Alessandro@FlagshipAP.com with comments or questions.