M&A dropped, but corporates have $4T of dry powder... (TWIF 2/25)

Shopify: The Future Needs More Black Businesses

Hello Fintech Friends,

As February and Black History Month in the US both come to a close, it's worth taking time to reflect on the work yet to be done when it comes to racial financial equity. According to data from the Federal Reserve’s Survey of Consumer Finances, median Black wealth increased from $27,970 to $44,890 in the 3 years from 2019 to 2022 – an astonishing climb.

And yet, the wealth gap between Black and other households climbed even more – according to Brookings, in 2022, for every $100 in wealth held by White households, Black households held only $15 dollars.

Wealth is not zero-sum: If you believe in the abundance agenda, you know that research shows that making each group in the US individually more well-off has the effect of making everyone more well-off.

Reducing inequality leads to greater overall wealth, stronger institutions, better education, and lower public costs. Let's keep building a world in which everyone is better off, one in which we no longer have to measure a racial wealth gap.

Please find another week of fintech exits and deep reads below. (👍👎 Have feedback for us? Let us know!)

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📖 Read of the Week

As you can probably guess, most of our deeper reads this week analyse the proposed $35 billion Capital One and Discover merger. As Axios discusses, large credit card issuers tend to charge higher rates, which could lead to more scrutiny from the DOJ. Notably, the merger agreement does not include a breakup fee, which suggests that the belief of these companies is that it is unlikely to withstand regulator scrutiny. You can find more analysis of the deal in our Deeper Reads section below.

Other good reads this week:

☯️ Exits

🤝 M&A - Fintech

Xalts, a Singaporean platform that enables financial institutions to build and manage blockchain-based apps (founded 18 months ago), acquired Contour, a digital trade platform set up by eight major banks including HSBC.
FairMoney, a neobank based in Lagos and headquartered in Paris, is in discussions to acquire Umba, a neobank providing payroll and financial services to customers in Nigeria and Kenya, for $20 million in an all-stock deal.
Crypto wallet provider RockWallet announced that it will acquire Wyre's userbase, after the crypto on-ramp service shut down last summer.
Private equity firms Acquiline Capital and Level Equity made a majority investment in accounting and business process automation provider DocuPhase.

M&A Dry powder https://t.co/a0y8TxPl3P
— Simon Khalaf (@Simonkhalaf) February 20, 2024

🏦 M&A - Bank and FinServ

Credit card issuer and bank Capital One announced its intent to acquire card network and proprietary issuer Discover for $35.3 billion.
Not to be outdone, US bank Truist agreed to sell off its insurance arm for about $15 billion to investors Stone Point and CD&R.
Private equity firm TPG is nearing in on a €4.5 billion bid for fund administrator Alter Domus.

“My buddy” in Bay Area can mean anywhere from “I have know his person for 20 years and officiated my wedding” to “I talked to this person once at an event for 5 mins.”
— Rohit Mittal (@rohitdotmittal) February 17, 2024

Capital One $COF buying Discover $DFS would create the largest credit card lender in the U.S. 👇🏻 https://t.co/vB3WHKdEBy
— Jevgenijs Kazanins (@jevgenijs) February 19, 2024