Trading app eToro plans to list on the stock market by merging with Betsy Cohen’s SPAC FinTech Acquisition Corp. V in a $10 billion deal, according to a Bloomberg report, as it eyes an expansion in the US.
The report sent FinTech V’s shares (FTCV) surging by as much as 23% in pre-market trading to $13.10, in a sign of investor excitement over the possible deal. The special-purpose acquisition company or SPAC, was worth around $366 million on Monday, having closed 1.7% higher at $10.71.
eToro’s tie-up with FinTech V would create a company with a combined value of about $10 billion, Bloomberg reported, citing people with knowledge of the matter. The people said the companies are raising roughly $650 million in equity.
Robinhood rival eToro was founded in 2007 and has since expanded to more than 100 countries around the world, giving it more than 20 million users.
The company currently provides cryptocurrency trading services in the United States, having expanded into the US market in 2018 and enlisted actor Alec Baldwin in an advertising push. Bloomberg reported it is expected to start providing stock trading in the US this year.
Interest in amateur investing has boomed during the coronavirus pandemic, with popular day-trading app Robinhood reporting 6 million new users so far in 2021 alone. Massive amounts of stimulus have flooded economies with cash, while many people have built up savings and have more time on their hands, fuelling retail trading.
FinTech Acquisition Corp. V is one of a number of SPACs chaired by Betsy Cohen, the founder of financial services firm The Bancorp. The company listed on the stock market in December, raising $250 million.
A SPAC is an entity that exists solely to list on the stock exchange to raise money, in the hope of finding and merging with a target company to take it public within a set timeframe.
The model can be extremely lucrative for the initial sponsors of the SPAC, and also offers the target companies a less costly and demanding way to go public.
A representative for eToro said the company does not comment on rumors. A spokesperson for FinTech V did not immediately reply outside of office hours.