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eToro will look to boost its business, drawing on its different revenue generation in relation to its major rivals.
Israeli social trading platform eToro is reportedly set to go public through a potential merger with a Special Purpose Acquisition Company (SPAC) dubbed FinTech Acquisition Corp. V (NASDAQ: FTCV). As reported by Bloomberg citing sources close to the deal, the acquisition vehicle lead is by renowned serial dealmaker Betsy Cohen and the merger between both firms will value them at a $10.4 billion valuation.
According to the report, both companies are looking forward to raising about $650 million in equity to support the deal. While eToro is yet to confirm any major move in this direction, the Bloomberg report quoted Cohen noting the trading platform’s need to scale up:
“In the last few years, EToro has solidified its position as the leading online social-trading platform outside the U.S., outlined its plans for the US market, and diversified its income streams. It is now at an inflection point of growth, and we believe EToro is exceptionally positioned to capitalize on this opportunity.”
eToro maintains as many as 20 million users in different countries and the platform is often regarded as the European equivalent of Robinhood Markets Inc. The firm made its foray into US markets in 2018 and in 2020, it became a member of the US Financial Industry Regulatory Authority Inc. or FINRA. By the second half of this year, the company is billed to begin providing stock-trading services in the United States.
With the proposed SPAC acquisition, eToro is set to get backing from one of the most experienced Dealmakers in Cohen, positioning it to compete with Robinhood and other rivals for the growing market share.
eToro SPAC Merger Boost
The news of the merger of eToro with Betsy Cohen’s SPAC vehicle has excited investors, sending the latter outfit’s stock up by 18.67% in the pre-market. Each share of FTCV was trading at $12.65 at the time of writing.
eToro will look to boost its business, drawing on its different revenue generation in relation to its major rivals. While the US-based trading platform, Robinhood generates funds from the payment for order flow, the Israeli-based counterpart makes money from the bid-ask spread model, capitalizing on the spread between the price its pays for securities and the price it passes along to customers.
eToro has a global presence and it has gained popularity through its uniqueness in letting users copy the trading of prolific investors and traders. FTCV announced it raised $250 million in funding back in December, positioning the company aright for the best merger with a performing outfit.
Per the report, both forms appear aligned to complete the merger, and if true, market enthusiasts expect a formal announcement to be made in the coming weeks.