Irish fintech sector sees record investment during pandemic

8 Sep 2020

Anna Scally, partner and fintech lead at KPMG in Ireland. Image: KPMG

Although many sectors saw investment slow in the early months of the Covid-19 pandemic, the Irish fintech industry saw a record period of activity with $328.6m in transactions recorded in the first half of 2020.

On Monday (7 September), KPMG released its latest pulse report on the Irish fintech industry, focusing on the first half of 2020.

The professional services firm publishes its Pulse of Fintech report twice a year, tracking global fintech venture capital (VC), private equity (PE), and merger and acquisition (M&A) investment trends.

According to KPMG’s latest report, Ireland’s fintech industry saw a record period of activity in the first half of 2020, with $328.6m recorded in VC, PE and M&A transactions across eight deals.

The report noted that the volume of deals has declined from the same period last year, which saw 14 deals take place, however the value of the deals recorded so far this year is more than double the total for all of 2019, where $155.6m was recorded across 26 deals.

Deals in Ireland

According to KPMG, the $162m acquisition of Irish-founded Prepaid Financial Services by Australia’s EML Payments was the largest strategic M&A deal of the fintech industry globally for the first half of 2020.

The deal between Prepaid Financial Services and EML Payments was first announced in November 2019, before it was renegotiated as a result of the Covid-19 pandemic, before the deal eventually closed in March 2020.

The Australian firm acquired the Meath-based fintech firm at a discounted price to reflect the economic reality of the pandemic.

Other notable deals in Ireland over the period include an $80m funding round by client lifecycle management company Fenergo.

Limerick-based CloudCards, which develops cloud-based aircraft asset management software, raised $2.2m in VC funding, while Dublin-based Supply Finance raised $1.96m in VC funding. Circit, a financial audit management platform raised $1.24m in investment in the same period.

There were four other investments in Irish fintechs in the first half of the year, which had undisclosed figures and so were excluded from KPMG’s report as a result.

Globally, fintech funding has dropped as a result of the Covid-19 pandemic. In the first half of the year, there was $25.6bn in total invested in the sector across 1,221 deals. There was a sharp drop in M&A activity, which accounted for just $4bn of fintech investment compared to $85.7bn in the second half of 2019.

The growing Irish fintech sector

Anna Scally, partner and fintech lead at KPMG in Ireland, said that the “sizeable deals” secured by Prepaid Financial Services and Fenergo have been a huge boost for Ireland’s fintech ecosystem this year.

“I expect interest and investment in Irish fintech to remain hot into H2 2020, particularly as UK and global fintechs work to ensure they are able to service their customers across Europe in the wake of Brexit,” she said.

“Ireland’s attractiveness as a place for global fintechs to do business also remains strong, with Mastercard announcing plans to grow its European technology hub on a new campus site in Leopardstown earlier this year.”

Scally added that the pandemic has accelerated the transition to adopt digital payment methods, stating that digital payments have now become “mainstream.”

“We saw earlier this year how Irish banks moved swiftly to increase the tap-and-go limit on debit and credit cards to facilitate more cashless payments in light of Covid-19,” Scally said. “We’ve also seen how quickly new financial technologies become embedded. Despite only being in the marketplace in Ireland since 2016, Revolut has now almost become a verb to instruct the transfer of funds.”

Fintech is not the only sector of Irish tech that has seen significant investment throughout the pandemic. The Irish Venture Capital Association (IVCA) recently announced that the first half of 2020 showed the highest level of VC investment in Ireland to date.

Kelly Earley was a journalist with Silicon Republic