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1 Fintech SPAC IPO to Watch in 2021

By Matthew Frankel, CFP® - Feb 19, 2021 at 7:11AM

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Here's the latest fintech start-up to take the SPAC route to the public markets.

There certainly has been no shortage of companies going public via special purpose acquisition companies, or SPACs, recently. And with the recent announcement of Payoneer's pending SPAC merger, it doesn't look like we've seen the end of it. In this Fool Live video clip, recorded on Feb. 8, contributor Matt Frankel, CFP and Industry Focus host Jason Moser discuss Payoneer's business and why it could be worth keeping on your radar. 

Jason Moser: Matt, we have another SPAC offering in the mix here.

Matt Frankel: Imagine that. [laughs]

Moser: It's just another day and another SPAC, right? This time, it is for a company we're talking about that cross-border opportunity, and this particular company that is going to go public via SPAC is one that may not be very familiar with a lot of folks. I haven't really looked much into it. But I mean, it's an interesting-looking business. I'm just not really sure what to make of it yet, but Payoneer. I know you've done some digging into this company. Tell us what you found.

Frankel: First about the SPAC. It's being taken public by a company called FTAC Olympus Acquisition (FTOC). That's quite a mouthful, but it's Betsy Cohen's SPAC. She is a financial-sector heavyweight there. She founded Jefferson Bank. She founded The Bancorp (TBBK 3.25%), which is a branches commercial bank, really innovative platform there. This is her fourth SPAC she's taken public. She was on SPACs before it was fashionable. [laughs] So we actually have some kind of a track record, which is really rare in this background. Just to run through the previous one, she took public CardConnect in 2015, which ended up being acquired by First Data (FDC), so shareholders made a good bit of money on that one. The second one was a company called International Money Express (IMXI 3.69%), which still trades publicly -- that was in 2017. It's up about 60% from the SPAC's IPO price. Then Paya (PAYA 0.50%) or Paya, I'm not sure exactly how it's pronounced just because I'm reading it -- it was taken public in 2019 and they're up about 40% from the SPAC's IPO price. So she's got a pretty good track record.

Moser: Yeah

Frankel: This is No. 4. Now getting to Payoneer, I'm not a customer of Payoneer, but they specialize in cross-border transfers.

Moser: Yeah.

Frankel: They had $44 billion flow through their network last year. They're pretty big. Their customers include companies like Walmart (WMT 2.85%), Airbnb (ABNB 0.65%), Amazon (AMZN -0.03%), Google (GOOGL 2.37%)(GOOG 2.15%). These companies use Payoneer to send money all over the world. Payoneer, like a good application would be if you're an advertiser and your advertising somewhere that's not your home country. You would use something like Payoneer to send the money to its end destination. They were founded 15 years ago. The company is being valued at $3.3 billion in this deal. Over a billion of that is new money. The SPAC raised over $800 million. There's a $300 million private investment coming alongside of it, so this company will have a good bit of cash to work with to grow. That's really one thing I like about the SPAC model is because it gives these companies a huge windfall of cash.

Moser: Yeah.

Frankel: That's more than Payoneer would likely get through a traditional IPO process.

Moser: Sure.

Frankel: Usually, you don't increase your share count by 50% in an IPO to raise capital, but that's really what they're doing here. They're valued at $3.3 billion and $1.1 billion is new cash, so it's a lot of ammo to grow with. Payoneer's mission is to democratize access to financial services, which in cross-border is something that is sorely needed.

Moser: Yeah.

Frankel: It's an interesting SPAC, and I like that Payoneer's management is going to remain in place. But one of the good parts about the SPAC combinations is you can leverage the other person's or the other party's experience in other connections, which Betsy Cohen has a ton of. I like this arrangement. I think it's a huge amount of cash for a company like Payoneer to grow with, and I'm curious to see what they do with it in the years ahead.

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Stocks Mentioned

FTAC Olympus Acquisition Corp. Stock Quote
FTAC Olympus Acquisition Corp.
Alphabet Inc. Stock Quote
Alphabet Inc.
$2,229.76 (2.37%) $51.60, Inc. Stock Quote, Inc.
$2,151.14 (-0.03%) $0.68
Wal-Mart Stores, Inc. Stock Quote
Wal-Mart Stores, Inc.
$122.60 (2.85%) $3.40
The Bancorp, Inc. Stock Quote
The Bancorp, Inc.
$19.07 (3.25%) $0.60
First Data Corporation Stock Quote
First Data Corporation
Alphabet Inc. Stock Quote
Alphabet Inc.
$2,233.33 (2.15%) $47.07
International Money Express, Inc. Stock Quote
International Money Express, Inc.
$19.65 (3.69%) $0.70
Airbnb, Inc. Stock Quote
Airbnb, Inc.
$113.28 (0.65%) $0.73
Paya Holdings Inc. Stock Quote
Paya Holdings Inc.
$6.00 (0.50%) $0.03

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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