• Consolidation fever grips non-bank lenders and banks alike—SME lending, revenue-based finance and PropFinance at its core.

Current market:

Marginal uptick in M&A activity

We are seeing:

Uptick in consolidation activity—>15 sizable consolidation M&A deals in the last 12 months:

Banks: seeking transformational transactions (e.g., BPCE's acquisition of Société Générale Equipment Finance)

Non-bank lenders: seeking scale in a populated market (e.g., Kare's, Teylor's and Confindo's respective acquisitions of Corona Capital, Creditshelf and Bancovo)

Diverse demographic of VC support for specialty lenders:

• (non-sector specific) VCs (e.g., Northzone's, VentureFriends' and 13books' respective equity investments in FINOM, Carmoola and Aria)
• (sector specific) VCs (e.g., Autotech Ventures' equity investment in Bumper)
• Trade VC arms (e.g., Uber Technologies', InMotion Ventures' / Jaguar Land Rover's and Shell Ventures' respective equity investments in Moove, Carmoola and Bumper)

Significant investment appetite from "longer-term money":

• Banks (e.g., Citi's equity investments in Numerated, Defacto and Fleximize)
• Pension funds (e.g., Teesside Pension Fund's investment in GB Bank)

Key drivers / challenges:

Consolidation driven by ambitions of:

• Conquering verticals (e.g., Volkswagen Pon Financial Services' acquisition of Zuidlease)
• Acquiring new debt collection technology (e.g., Everyday People Financial's acquisition of Past due Credit Solutions)
• Expanding international presence (e.g., Levenue's acquisition of MidFunder)

Availability of growth capital for speciality lenders:

Hottest lending verticals for fundraising activity in the last 12 months:

1st | SME lendings
Successful fundraisings including: FINOM, Defacto, multifi, Fleximize, Finiata and Zanifu

2nd | Autofinance
Successful fundraisings including: Moove, Lizy, Carmoola and Bumper

3rd | Working capital
Successful fundraisings including: Aria and TRIVER

Banks gaining access to niche verticals by financing specialty lenders:

• Credit lines (e.g., Barclays' participation in iwoca's £200 million debt funding round)
• Securitisation structures (e.g., Goldman Sachs' and Citibank's participation in Fleximize's £136 million securitised funding round)

Trends to watch:

Uptick in consolidation M&A transactions funded otherwise than through available cash:

• Share-for-share transactions (e.g., Alisa Bank & PURO Finance merger)
• Tapping debt capital markets (e.g., Nordiska's acquisition of Umeå Release Finans)

Safety in numbers—rise of partnerships to weather the private capital drought (e.g., Sancus Lending's bridge financing JV with Hawk Lending)

Our M&A forecast

M&A levels are likely to remain relatively constant amidst uncertain private capital and public equity market conditions.

Likely see-saw effect between consolidation and fundraising activity, with an uptick in “paper” transactions.

Specialty Finance / Marketplace Lending – Publicly reported deals & situations

Strong investor / buyer interest

Deal highlight:
White & Case advised Magellan Capital on its acquisition of Danish Ship Finance, the Copenhagen-based shipping finance specialist, from Nordic private equity group Axcel and Danish pension funds PFA and PKA.

Private equity / venture capital:

• Hera Holdings: SME property financing, Participation in £85 million funding round in GB Bank (May 2024)
• Mubadala Investment, The Latest Ventures, Africinvest, Palm Drive Capital, Triatlum Advisors and Future Africa: Automobile finance, Participation in US$100 million Series B funding round in Moove (March 2024)
• Northzone and General Catalyst: SME finance, Participation in €50 million Series B funding round in FINOM (February 2024)
• Fasanara Capital: Working capital finance, Acquisition of majority stake in Pollen VC (January 2024)
• VentureFriends, AlleyCorp and u.ventures: Automotive finance, Participation in £15.5 million funding round in Carmoola (January 2024)
• Autotech Ventures: Automotive finance, Participation in €46 million Series B funding round in Bumper (January 2024)
• 13books Capital: Invoice financing, Participation in €15 million funding round in Aria (December 2023)
• Avellinia Capital: SME / working capital finance, Participation in £20 million debt funding round in TRIVER (November 2023)
• Rockaway Blockchain Fund: Decentralised debt funding platform, Participation in US$60 million funding round in Credix (November 2023)
• Fasanara Capital: SME lending, Participation in £10 million debt funding round in multifi (October 2023)
• Fasanara Capital: SME lending, Participation in €20 million equity funding round in Finiata (August 2023)
• Beyond Capital Ventures and Variant Investments: SME lending, Participation in US$11.2 million pre-Series A debt & equity funding round in Zanifu (August 2023)

FIs:

• Citi: AI-powered modular commercial lending platform, Equity investment in Numerated (June 2024)
• Citi Ventures: SME lending, Participation in €10 million Series A+ funding round in Defacto (November 2023)
• Goldman Sachs and Citibank: SME lending, Participation in £136 million securitised funding round in Fleximize (September 2023)
• HSBC: Supply chain finance, Participation in US$35 million funding round in Tradeshift (August 2023)

Non-FIs:

• Uber Technologies: Automobile finance, Participation in US$100 million Series B funding round in Moove (March 2024)
• D’Ieteren:  Automotive finance, Participation in €11.5 million funding round in Lizy (February 2024)
• InMotion Ventures (Jaguar Land Rover): Automotive finance, Participation in £15.5 million funding round in Carmoola (January 2024)
• Shell Ventures: Automotive finance, Participation in €46 million Series B funding round in Bumper (January 2024)

Pension funds:

• Teesside Pension Fund: SME property financing, Participation in £85 million funding round in GB Bank (May 2024)

Sponsors:

• Magellan Capital: Marine finance (Acquisition of Danish Ship Finance (June 2024)

Availability of growth capital

• Numerated: AI-powered modular commercial lending platform, Successful equity investment from Citi (June 2024)
• GB Bank: SME property financing, Successful £85 million funding round led by Hera Holdings and Teesside Pension Fund (May 2024)
• Moove: Automobile finance, Successful US$100 million Series B funding round led by Uber Technologies, Mubadala Investment, The Latest Ventures, Africinvest, Palm Drive Capital, Triatlum Advisors and Future Africa (March 2024)
• Lizy: Automotive finance, Successful €11.5 million funding round led by Alychlo, D’Ieteren and the Flemish Welfare Fund (February 2024)
• FINOM: SME finance, Successful €50 million Series B funding round led by General Catalyst and Northzone (February 2024)
• Kriya: B2B BNPL, Successful £50 million debt funding round led by Viola Credit (January 2024)
• Carmoola: Automotive finance,Successful £15.5 million funding round led by QED Investors, VentureFriends, InMotion Ventures (Jaguar Land Rover), AlleyCorp and u.ventures (January 2024)
• Bumper: Automotive finance, Successful €46 million Series B funding round led by Autotech Ventures and Shell Ventures (January 2024)
• Aria: Invoice financing, Successful €15 million funding round led by 13books Capital (December 2023)
• TRIVER: SME / working capital finance, Successful £20 million funding round led by Avellinia Capital (November 2023)
• Defacto: SME lending, Successful €10 million Series A+ funding round led by Citi Ventures (November 2023)
• Credix: Decent ralised debt funding platform, Successful US$60 million funding round led by Rockaway Blockchain Fund (November 2023)
• multifi: SME lending, Successful £10 million debt funding round led by Fasanara Capital (October 2023)
• Fleximize: SME lending, Successful £136 million securitised funding round led by Goldman Sachs and Citibank (September 2023)
• Finiata: SME lending, Successful €20 million equity funding round led by Fasanara Capital (August 2023)
• Zanifu: SME lending, Successful US$11.2 million pre-Series A debt & equity funding round led by Beyond Capital Ventures and Variant Investments (August 2023)
• Tradeshift: Supply chain finance, Successful US$35 million funding round led by HSBC (August 2023)

Market consolidation

Deal highlights:

White & Case advised Groupe BPCE, France’s second-largest banking group, on its acquisition of Société Générale Equipment Finance, one of Europe’s leading industrial equipment lease financing providers.

White & Case advised Swiss-headquartered digital lending platform Teylor on the acquisition of creditshelf’s business and operations.

Specialty finance businesses:

• Generalfinance: Invoice finance, Acquisition of 96% of Workinvoice (June 2024)
• Evolution Funding: Automotive finance, Acquisition of Creditas Financial Solutions (May 2024)
• Kare: SME lending, Acquisition of Corona Capital (April 2024)
• Teylor: SME lending, Acquisition of creditshelf (April 2024)
• Volkswagen Pon Financial Services: Automotive finance, Acquisition of Zuidlease (March 2024)
• Levenue: Revenue-based finance, Acquisition of MidFunder (March 2024)
• PragmaGO: Factoring and SME lending, Acquisition of Monevia (February 2024)
• Absolute Capital: Digital financing, Participation in €100 million funding round in Unlimitd (December 2023)
• Confindo: SME lending, Acquisition of Bancovo (November 2023)
• Everyday People Financial: Revenue-based finance, Acquisition of Pastdue Credit Solutions (July 2023)
• Traton: Automotive finance, Acquisition of MAN’s and Volkswagen Truck & Bus’ financial services business  (July 2023)
• Mobilize Lease&Co / Renault Group: Automotive finance, Acquisition of MeinAuto (July 2023)

Banks:

• Alisa Bank: Invoice financing, Acquisition of PURO Finance (April 2024)
• BPCE: Equipment leasing, Acquisition of Société Générale Equipment Finance (March 2024)
• Nordiska Kreditmarkn-adsaktiebolaget: SME finance, Acquisition of Release Finans (December 2023)
• African Bank: Real estate finance, Acquisition of Sasfin’s capital equipment finance and commercial property finance businesses (October 2023)

Russian exits

Deal highlights:

White & Case advised Société Générale and ALD Automotive, acting through LeasePlan Corporation and AALH Participaties, on the sale of LeasePlan Rus.

White & Case advised PEAC Finance Europe, the pan-European leasing business, on the sale of its Russian subsidiary, PEAC Leasing, to ExpoCapital Liz, as well as the sale and transfer of certain shareholder receivables to Expobank.

• Société Générale: Automotive finance, Disposal of LeasePlan Rus (October 2023)
• PEAC Finance Europe: Automotive finance, Disposal of PEAC Leasing (September 2023)

Partnering to brave the growth capital drought

• Sancus Lending: Property lending, Property development and bridge financing JV with Hawk Lending (December 2023)

_{White & Case means the international legal practice comprising White & Case LLP, a New York State registered limited liability partnership, White & Case LLP, a limited liability partnership incorporated under English law and all other affiliated partnerships, companies and entities.}

_{This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.}

_{© 2024 White & Case LLP}