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The public markets have seen improved performance over the last 12 months, with the Alantra Fintech index up 18% and the Nasdaq up 25%, however performance over the last six months for Fintech stocks has been broadly flat. Valuations have also stabilised, albeit remain roughly 40% lower than the highs seen at the back end of 2021, and 20% down on pre-pandemic levels, during which time the macro environment was considerably more favourable.
M&A volumes and values also remain depressed, down 16% and 13% in the last 12 months, but with signs of improvement this year (Q1 23 was a rare quarter on quarter increase). Despite volumes declining further in the last quarter, we saw a significant increase in deal value, driven by a handful of mega deals completing. Activity in sub-sectors has been drivingstrategic consolidation (Payments) and focus on robust business models (B2B Fintechs). VC activity continues to decline in line with the wider market, with a shift to smaller bridging rounds and an increase in secondary deals as the market experiences a lack of liquidity.
Looking ahead to 2024, we remain cautiously optimistic for continued improved performance, particularly for those fintech scale-ups that are able to reach profitability (a milestone that is increasingly important for a successful exit) and for those that are able to harness the benefits of emerging technologies, such as generative AI.
As a firm we continue to be active across all sub-sectors, advising on 17 Fintech deals in the last 24 months. Our differentiated model combines a scaled and global technology team with a market leading and comprehensive FIG team to offer a unique service to our Fintech clients. This cross-sector, cross-product capability comprises a full spectrum of advisory services, including M&A, capital raising, and strategic and regulatory advisory across all segments of Fintech, including Credit and Lending Tech, Capital Markets, Digital Banking, Wealth Tech, Payments and Office of the CFO.