Investment in Aussie FinTech sector hits new record
Investment in Australia’s FinTech industry climbed to a record US$656 million ($853.3 million) across 25 deals in 2016 — up from US$185 million in 2015, according to analysis from KPMG.
Investment in the sector has been growing at an average of 90% per year for the past four years, KPMG’s analysis indicates. Growth in 2016 was particularly notable considering the fact that global FinTech investment fell 47% during the year to US$24.7 billion.
Last year’s strong growth was driven by large M&A and venture capital transactions, including CHAMP Private Equity’s acquisition of online forex broker Pepperstone and Stirling Products’ purchase of internet trading platform Mx360Group in March.
Large funding rounds from EFTPOS solutions provider Tyro Payments and online business loan provider Prospa Financial also contributed.
“In just five years, Australia has seen the creation of a healthy and active FinTech sector, from an extremely low base of just (US)$51 million of FinTech investment in 2012 to exceed (US)$600 million in 2016,” KPMG global co-leader of FinTech and head of banking for KPMG Australia Ian Pollari said.
“Similar to what we have seen globally in 2016, Australia’s performance was driven by some large deals, and specifically M&A and private equity transactions... While mega deals result in peaks and troughs in overall figures, the trend is clear and demonstrates increasing interest and investment activity in FinTech.”
Total venture capital investment in Australia’s FinTech sector fell to US$71 million across 15 deals, down from US$175 million in 2015. But Pollari said VC activity remained “reasonably strong” during the year, and was roughly comparable with the US$88 million in VC investment from 2014.
Treasurer Scott Morrison welcomed the news and said the government is committed to helping foster development in the FinTech sector.
“The Turnbull government has announced its intention to stop the ‘double taxation’ of digital currencies under the GST regime and the development of legislation to extend the crowdsourced equity funding framework to private companies,” he said.
“Financial technology — or FinTech — is transforming our financial system and potentially our entire economy. The Turnbull government is committed to ensuring Australia is at the forefront of the global FinTech industry so that we can drive improvements and enable more beneficial financial services for Australian consumers as well as help to positively transition our economy.”
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