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eToro goes public seeking $10bn valuation

Bullish marketOnline trading and investment group eToro is set to go public in a special purpose acquisition company (Spac) deal that values the business at $10.4 billion (€8.73 billion).

It is one the largest Spac deals to date as eToro seeks to capitalise on the rise in digital assets trading, especially among retail investors.

The Israeli-based  platform has merged with blank cheque company Fintech Acquisition Corp V, from which it will receive $250 million, along with a further $650 million from a consortium of investors including Fidelity and SoftBank’s Vision fund. 

The merger is expected to close in Q3, after which eToro plans to list on US exchange Nasdaq.

The platform, which competes with the likes of Robinhood, has over 20 million registered users. In 2020, it saw revenue climb by 147% to more than $600 million. 

Membership has surged in 2021 in the wake of the GameStop trading frenzy. In January, eToro added over 1.2 million registered users and executed more than 75 million trades. 

The platform has targeted a younger customer base by offering fractional shares and cryptocurrency trading alongside traditional assets.

Speaking to Funds Tech in March 2020, eToro’s managing director in the UK, Iqbal Gandham, outlined the company’s ambition to be “the Amazon of finance” by offering products to cover a broad risk appetite, from highly leveraged products to vanilla instruments.

The platform also features what it describes as ‘social trading’ whereby its users can copy each other’s trading strategy. 

The eToro transaction is a further example of the popularity of Spac deals as an alternative to initial public offerings (IPOs) when it comes to fundraising. 

The arrangements enable companies to access public capital in a less regulated and scrutinised way than a traditional IPO. 

In the US, the market is already close to exceeding the $78 billion of volume achieved in all of 2020. 

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