Investment in UK fintech has reached an all-time high, as firms in the industry attracted a staggering $24.5bn in the first half of the year across the highest volume of deals on record.
British fintech investment across private equity (PE), venture capital (VC) and M&A deals has exploded as the country emerges from the pandemic, soaring in the first six months of 2021 to four times the $5.9bn invested during the whole of 2020.
The UK’s bumper cash injection was buoyed by a $14.8bn M&A deal by Refinitiv, and overall dealmaking skyrocketed to 283 in the first six months of the year – the most on record, according to the new data from KPMG.
VC investment in UK fintechs was particularly strong, reaching $6.2bn in the first half of the year – double that of the second half of 2020.
It’s indicative of the growing momentum within the industry spurred on by renewed confidence and increased appetite from investors following a turbulent 2020.
UK fintechs attracted significantly more funding than their counterparts in the rest of EMEA combined, and came second only to the US in the first half, whose fintech industry attracted $42.1bn.
In Europe, the Nordic region was closest behind the UK, raking in $4.8bn investments in the first half.
“Covid has spurred a race to digital in UK financial services and many of the major banks have dipped into their investment pots for digitalisation – a major reason we are seeing so much corporate investment,” said Karim Haji, UK head of financial services at KPMG.
“This timing, together with the UK’s reputation as a historic financial services sector and ongoing work to nurture fintechs, from testing through to listing, makes the UK a magnet for investment.”
On a global scale, fintech investment shot up to record levels at $98bn in the first half of 2021 – up from $87bn in H2 2020.
Of these investments, corporates accounted for almost $21bn, as they rushed to increase their digital portfolios.
Investment firms sitting on hefty dry powder cash reserves after the pandemic also explained the dealmaking frenzy as pandemic restrictions eased in many EMEA countries.
Global valuations also remained high, contributing to the creation of 163 unicorns in the first half.
“Large funding rounds, high valuations and successful exits underscore the thesis that digital engagement of customers that accelerated during the pandemic is here to stay,” said Ian Pollari, KPMG’s Global Fintech Co-Lead.