eToro Cancels SPAC Deal, Cuts 100 Employees, Aims to Raise Money at Lower Valuation: Report

eToro, a modern spin on investing and trading that merges both digital assets and traditional securities, has axed its SPAC deal, according to a statement issued by the company. At the same time, Calculistech is reporting that their headcount is being slashed by 100 employees with half being in Israel.

Yesterday, eToro announced that Fintech Acquisition Corp. V (NASDAQ: FTCV), and eToro Group Ltd, have mutually agreed to terminate their previously announced agreement to complete a SPAC deal, effective immediately.

Fintech V raised $250,000,000 in its initial public offering in December 2020.

When the deal was revealed in 2021, eToro received an implied equity value of $10.4 billion. The SPAC deal was described at the time by eToro CEO and co-founder Yoni Assia as a “momentous milestone for eToro.”

The deal was contingent upon multiple factors including a transaction completion date of June 30, 2022 – something that was clearly not accomplished. The 8-K filing pointed to the inability to complete a registration statement for the deal to be completed stating “despite the parties’ best efforts, such conditions were not satisfied within such time frame and the parties were unable to complete the transaction.” The Securities and Exchange Commission has recently applied more stringent rules to SPACs making them less appealing.

No termination fee will be paid as the decision to end the merger was mutual.

Betsy Cohen, Chairman of Fintech V said in a public statement that eToro continues to be a leading global social investment platform, with a proven track record of growth:

“Although we are disappointed that the transaction has been rendered impracticable due to circumstances outside of either party’s control, we wish Yoni and his talented team continued success.”

Assia thanked Cohen and her team for their hard work adding that this was not the outcome they had hoped for:

“… eToro’s underlying business remains healthy, our balance sheet is strong, and will continue to balance future growth with profitability. We ended Q2 2022 with approximately 2.7 million funded accounts, an increase of over 12% versus the end of 2021, demonstrating continued customer acquisition and retention rates that have been improving over time. We remain confident in our long-term growth strategy and excited for the future of eToro.”

The overall market has soured for both public and private firms, as private capital has slowed and IPOs have pretty much come to a hault. The aforementioned report states that eToro is now seeking to raise capital at a valuation of $5 billion, a significant haircut to the SPAC deal valuation. The funding is said to be in “advanced stages” raising around $800 million to $1 billion.

 

 

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