A record US$7.8 billion was invested in Canadian fintechs in the first six months of 2024, up more than seven-fold from last year\u2019s full-year total of US$1.1 billion. Private equity investments into two Montr\u00e9al-based fintechs \u2013 Nuvei Corp. and Plusgrade Inc. \u2013 accounted for as much as 94 per cent of the total value invested in Canada \u2013 and were also among the biggest five deals globally.<\/p>\n
\u201cThese two Canadian deals \u2013 among the biggest in the world \u2013 reflect the growing fintech ecosystem in Montr\u00e9al and Quebec more broadly, where the startup scene is thriving thanks to support from institutional investors, and world-class universities are providing a steady stream of talent,\u201d says Georges Pigeon, a partner in KPMG in Canada\u2019s deal advisory practice in Montr\u00e9al who specializes in financial services.<\/p>\n
Nuvei\u2019s US$6.3 billion take-private deal was the largest in Canada, and the second largest globally. A consortium led by American private equity firm Advent International Corp., along with Novacap Management Inc., Caisse de d\u00e9p\u00f4t et placement du Qu\u00e9bec (CDPQ) and Nuvei chair and chief executive Philip Fayer acquired the Montr\u00e9al-based payment technology firm in April.<\/p>\n
In March, New-York based General Atlantic invested US$1 billion into Montr\u00e9al-based Plusgrade, a software provider to the travel industry \u2013 making it the second largest deal in Canada and the fifth largest globally. The investment saw Novacap exit its stake in the Plusgrade, with CDPQ remaining a significant shareholder.<\/p>\n
Excluding those two deals, total investment was US$516.8 million, down 26 per cent from the US$696 million invested in the second half of last year, and up nearly 20 per cent from the US$434.2 million invested in the first half of 2023.<\/p>\n
Mr. Pigeon says after two years of relatively weak investment in Canadian fintechs, activity could begin to bounce back in the next six months. \u201cOver the past few weeks, we have already seen a number of significant investments and M&A activity take place in Canada, which suggests that the dealmaking environment could be on a path to normalization soon \u2013 although it won\u2019t return to the record level of investment we saw in 2021,\u201d he said.<\/p>\n
Recent investments such as digital mortgage lender nesto Inc.\u2019s acquisition of CMLS Group, CGI Inc.\u2019s acquisition of Celero\u2019s credit union business, and Clio\u2019s recent US$900M Series F raise could could signal a potential pickup in deals, Mr. Pigeon notes.<\/p>\n
\u201cOne trend we expect to see is that of well-funded fintechs acquiring traditional financial services companies. In that scenario, the target company can transform itself by upgrading its technology more quickly than a situation where it has to figure out how to absorb and integrate the fintech.\u201d<\/p>\n
Of the 65 investments in the first half, 46 were venture capital investments worth US$264 million. The largest VC investment was Brim Financial\u2019s US$62.8 million series C funding round in April. Corporate venture capital investments accounted for one quarter of all VC activity, with 12 deals worth $143 million.<\/p>\n
Total fintech investment activity (VC, PE and M&A) in Canada<\/h3>\n
Source: Pulse of Fintech H1\u201924, KPMG International (data provided by PitchBook), as of June 30, 2024<\/em><\/p>\n![](\"https:\/\/www.insurance-canada.ca\/wp-content\/uploads\/2024\/08\/kpmg-Total-fintech-investment-activity-1024x543.jpg\")
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