Private equity and venture capital investment in financial technology and payments companies in Europe has been dwarfed by the $10.09 billion put into US companies in the first five months of the year, according to S&P Global Market Intelligence data.
By comparison, total private equity investment in European fintech and payments companies stood at $1.10 billion in the year to May 31.
The number of deals in Europe was 49, whereas the US saw 73 transactions during the period.
Europe's year on year plunge
European fintech and payments companies attracted only $621.3 million in investments in the first quarter, more than 10x lower than the $6.73 billion reported during the same period a year ago.
By comparison, private equity investment in the US fintech and payments sectors ballooned to $9.71 billion from $4.35 billion year over year, on the back of Stripe Inc.'s $6.87 billion series I funding. Firms such as Andreessen Horowitz LLC, Founders Fund Inc. and Temasek Holdings (Pvt.) Ltd. participated in the round.
Shortage of large deals
In 2022, private equity deals in the European fintech vertical saw a number of transactions above $1 billion, but none so far in 2023, said Angela Lai, head of APAC and valuations at Preqin's Research Insights product.
"Looking at the deal counts, the drop has been less drastic [compared to US deals] ... and this could be explained by lower valuations and generally a lower appetite for large deals in an uncertain market," Lai told Market Intelligence in an emailed response.
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Looking at subsectors, digital lending companies secured the most capital from private equity investors in the first quarter, bringing in $292.3 million in total transaction value. Companies in the payments industry came in second with $264.3 million.
The financial media and data solutions subsector had the most deals in the quarter with 10 transactions.
UK has lion's share of deal activity
First quarter totals show the UK accounted for most of the investment value in fintech and payments companies, recording $549.0 million in aggregate. Of the 10 biggest investments in the first quarter, six went to UK-based companies.
The UK is a venture capital hub, Lai said. "If we look at venture capital fintech deals, then the UK is definitely an important market which has made up roughly half of Europe's deal value in recent years."
Germany came in second with $26.6 million, followed by Portugal with $18.5 million.
Top deals
The biggest deals in the first quarter were travel commerce platform Travelport Worldwide Ltd.'s $200 million investment from Siris Capital Group LLC and Elliott Management Corp. and maritime leasing platform Neptune Maritime Leasing Ltd.'s $200 million investment from Costamare Inc. and Latsco Family Office SA.
