Skadden and Tel-Aviv based firm Meitar are advising Israeli multi-asset brokerage firm eToro on a merger with FinTech V, a special purpose acquisition company (SPAC).
The SPAC, which is sponsored by fintech investing platform FinTech Masala, is represented by Morgan Lewis and Israeli firm Gornitzky & Co. It raised $250m in its IPO last December.
The deal puts the value of eToro Group, the name under which the combined company will operate when it re-lists on the NASDAQ, at $10.4bn.
This includes a £650m private investment in public equity (PIPE) from institutional investors, with Davis Polk & Wardwell serving as legal advisors to the placement agents on the PIPE.
Existing eToro shareholders will retain 91 percent of the pro forma equity of the combined company. EToro CEO Yoni Assia also negotiated 1.28m shares of the sponsor as part of the deal.
FinTech Masala chairman and serial deal maker Betsy Cohen (who has also chaired the board for FinTech I – V), commented that FinTech Masala looks for companies with “outsized growth, effective controls and excellent management teams.” She added that in the past few years eToro has “solidified its position as the leading online social trading platform outside the US, outlined its plans for the US market and diversified its income streams.”
Skadden, Morgan Lewis and Davis Polk have repeated the roles for FinTech V that they performed for Fintech IV, which saw that SPAC combine with financial services firm Perella Weinberg Partners.
Previously, Philadelphia-based firm Ledgewood acted as legal counsel for FinTech I and III, with Kirkland and Ellis advising the SPAC target. New York-based Fried Frank Harris Shriver & Jacobson filled in for the second SPAC merger.
According to SPAC Research, Kirkland and Ellis, Skadden, and Davis Polk have won 12.2 percent, 10.6 percent and 9.77 percent respectively of SPAC contracts in 2021. This places them first, third and fifth in the rankings.
eToro has grown rapidly in the past year, with five million of its more than 20 million users signing up in 2020 alone. The trading platform’s CEO and founder Yoni Assia attributes this to a “perfect storm” of Bitcoin’s surge in value and the boost in retail investment following the GameStop frenzy, which caused signups to retail investment platforms to skyrocket.
The merger will enable eToro to beat its rival Robinhood to an IPO. Robinhood had plans to float before now but has delayed the face of an investigation by the SEC for alleged fraud.
The New York-based Skadden team included financial institutions/M&A partner Sven Mickisch M&A partner Maxim Mayer-Cesiano, capital markets partner David Goldschmidt, executive compensation and benefits partner Erica Schohn; tax partner Victor Hollender; intellectual property and technology partner Stuart Levi; and financial institutions regulation and enforcement partner Brian Christiansen (Washington, D.C.).
The Morgan Lewis team consisted of partners Todd Hentges, Kevin Shmelzer, and Tim Rupp, and of counsel Jeff Letalien, assisted by partner Doug Kingston and associates Matthew Riehle, Robert Powers, Natalie Dundas, Fannie Law, and Randall Bentley.
The Meitar team: Dan Shamgar, Jonathan Irom, David Glatt, Dr. Michael Bricker, Keren Shitrit, Maor Hakak, Yuval Sasson, Ram Landa, Lilach Shacham Kaneti, Yuval Levison, Noam Loshinsky, Lilach Gur and Noa Haimi Cohen.
The Davis Polk corporate team included partners Leo Borchardt (London) and Derek Dostal (New York) and associate Maxim Van de Moortel (London).
The Gornitzky & Co team consisted of corporate and M&A partners Chaim Friedland and Timor Belan, senior associate Netanel Kahane, associate Desiree Reichman, tax partners Daniel Paserman, Dr Assaf Prussak, senior associate Nir Moses, associate Lilach Shamir, labour partner Michael Ayalon and associate Keren Ovadia.
Goldman Sachs and Citi are serving as co-placement agents on the PIPE. PIPE investors include ION Investment Group, Softbank Vision Fund 2, Third Point, Fidelity Management & Research Company and Wellington Management.
The business combination, which has been unanimously approved by the boards of directors of both eToro and Fintech V, is targeted to close in the third quarter of 2021.