Two megadeals drive record half for investment in Canadian fintechs
Megadeals for Montreal-based fintechs Nuvei and Plusgrade powered the total value of investments in Canadian fintechs to a record high of US$7.8 billion in the first six months of 2024. Broader dealmaking in the sector, however, remains weak, according to KPMG’s H1’24 Pulse of Fintech report.
Nuvei’s take-private deal accounted for the lion’s share of dollar value, at US$6.3 billion – making it the largest in Canada and second-largest globally in H1 24. A consortium led by US private equity (PE) firm Advent International alongside Novacap Management, CDPQ, and Nuvei CEO and chair Philip Fayer acquired the payment tech firm in April.
US-based General Atlantic in March invested US$1 billion in Plusgrade, a software provider to the travel industry, making it the second-largest deal in Canada and the fifth-largest in the world. Novacap exited its stake while CDPQ remained a significant shareholder.
The two deals accounted for 94% of investment value in the Canadian fintech market in H1 24, leaving US$516.8 million for the rest of the deals. That value represents a 26% drop from H2 23 but a 20% increase from H1 23’s figures.
After two years of relatively weak investment, KPMG deal advisory partner Georges Pigeon says activity could begin to bounce back in H2 24.
“Over 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 – although it won't return to the record level of investment we saw in 2021," he said.
Pigeon also expects to see a trend of well-funded fintechs acquiring traditional financial services companies.
Of the 65 deals in the first half, 46 were venture capital investments worth US$264 million, with corporate venture capital representing 12 deals worth US$143 million.
Most money went to the payments sector, at US$6.4 billion across nine deals – and mostly into the Nuvei deal.
Fintechs in AI and machine learning attracted US$31 million across eight deals. Pigeon expects AI and GenAI to be a major investment area in the second half and into next year.
Zooming out to the global view, US$51.9 billion was invested in fintechs in H1 24 across 2,255 deals, down 17% from US$62.3 billion invested in H2 23 across 2,287 deals. The most recent period is the weakest six months of fintech investment since the first half of 2020.
The KPMG report expects global fintech investment in the second half to remain subdued, perhaps except for AI and GenAI companies.
