- Singapore’s fintech deal count increased by 19% to 117 deals in H1’24, though total deal volume fell by 34% to US$522.89 million due to economic uncertainties.
- Investment in cryptocurrency and blockchain in Singapore rose by 22% to US$211.90 million across 72 deals.
- Global payments led fintech investment in H1’24, attracting US$21.4 billion.
- Global regtech investment reached US$5.3 billion, surpassing 2023’s annual high by mid-year.
- The Americas accounted for the majority of fintech investment in H1’24, with US$36 billion.
Singapore, August 7, 2024 – The first half of 2024 showcased the resilience and adaptability of Singapore’s fintech market, with a notable increase in deal activity. According to KPMG’s latest Pulse of Fintech report, deal activity surged by 19%, reaching 117 deals across venture capital (VC), private equity (PE), and mergers & acquisitions (M&A) in H1’24, compared to H2’23. Despite this, Singapore fintechs’ total funding fell by 34% to US$522.89 million from US$790.10 million in H2 23. Globally, fintech investment also saw a decline, falling from US$62.3 billion across 2,287 deals in H2’23 to US$51.9 billion across 2,255 deals in H1’24.
A tighter funding environment has resulted from investor caution in response to high interest rates and economic uncertainty. This has resulted in a shift towards smaller, early-stage investments rather than large-scale deals. In Singapore, this trend is evident with 52 early-stage deals, 32 seed rounds, 25 later-stage investments, and 5 M&A transactions recorded.
Anton Ruddenklau, Global Head of Fintech and Innovation, Financial Services at KPMG International, remarked, “The reality is that the overall global investment total for the first half of the year was buoyed by a handful of large deals, several of which were take-privates aimed at avoiding significant or further valuation losses. Meanwhile, the volume of early-stage deals globally has been thriving both because of the interest in new technologies, such as AI applications, and newer business models to meet the changing nature of the financial services sector. The rise of ‘platforms’ continues to gain momentum as decentralisation, data aggregation, and ecosystem connectivity become mainstream.
Cryptocurrency & Blockchain, Payments, and AI Segments Lead Deal Activity
The cautious investment environment has seen increased regulatory scrutiny of blockchain and digital assets. In Singapore, the cryptocurrency and blockchain segments recorded US$211.90 million across 72 deals in H1’24, a 22% increase from US$166.30 million over 38 deals in H2’23. Singapore is focused on developing robust risk management frameworks for digital asset tokenisation, recently announcing an initiative to scale asset tokenisation within financial services.
Globally, the crypto and blockchain sectors stabilised at US$3.2 billion, despite previous declines. While deal sizes remained relatively small, the volume was strong, with 677 deals completed in H1’24, indicating a solid year-over-year increase.
The payments segment in Singapore secured the second-highest investment, attracting US$80.20 million across 10 deals in H1’24. This marked a 78% decline from US$142.65 million across 14 deals in H2’23. Notably, the largest payments deal in the ASPAC region involved a US$50 million venture capital raise by Singapore-based B2B payments platform Nium. Singapore’s payments activity includes dynamic payment architectures, cross-border payment solutions, and embedded payment solutions. Globally, the payments segment led fintech investment in H1 2024, drawing US$21.4 billion.
AI funding stabilised following its surge in H2’23, with investments falling to US$65.62 million across 10 deals in H1’24, down from US$333.13 million over 14 deals. The AI market has come under more regulatory scrutiny because of its complex technologies, which demand a sizable upfront investment and longer return timelines. This scrutiny has slowed the deal-making process as companies and investors adapt to new compliance requirements and economic uncertainties.
Optimism for 2025 Amidst Fluctuating Fintech Investments
Over the past five years, Singapore’s fintech sector has experienced notable fluctuations. Deal-making slowed during the pre-pandemic period before exploding post-pandemic, reaching a peak of US$3.27 billion in H1’22. However, recent economic challenges have tempered this momentum, resulting in smaller deal sizes and reduced large-scale funding. Despite this, there is optimism for 2025, with expectations that a backlog of fintech deals will rejuvenate the investment landscape.
Global Fintech Mega-Deals Contract While Regional Activity Shows Promise
Globally, only five fintech deals exceeded US$1 billion in H1’24. These included the buyouts of US-based Worldpay for US$12.5 billion, Canada-based Nuvei for US$6.3 billion, US-based EngageSmart for US$4 billion, UK-based IRIS Software Group for US$4 billion, and Canada-based Plusgrade for US$1 billion. The largest VC deal was a US$999 million raise by UK-based Abound.
Despite a decline in total investment, regional deal volume showed promise. While global deal volume decreased slightly, the sole cause of this decline was a decline in EMEA, which fell from 804 in H2 23 to 689 in H1 24. In contrast, the Americas saw deal volume rise from 1,066 to 1,123, while ASPAC saw an increase from 406 to 438, indicating underlying resilience.
Karim Haji, Global Head of Financial Services, KPMG International, added, “The high cost of capital and geopolitical uncertainties related to conflicts and elections have significantly dampened global investments this year, and the fintech market is no exception. Investors are cautious, particularly regarding large transactions on the M&A front, due to concerns about valuations and the profitability of potential targets. They are focusing on improving the companies they already own rather than acquiring new ones.”
Global Key Highlights:
- Total Global Investment: Fell from US$62.3 billion across 2,287 deals in H2’23 to US$51.9 billion across 2,255 deals in H1’24.
- Americas Investment: Decreased from US$38.5 billion to US$36.7 billion between H2’23 and H1’24, with US investment dropping from US$35 billion to US$27.4 billion.
- EMEA Investment: Fell from US$19.1 billion to US$11.4 billion.
- ASPAC Investment: Declined from US$4.6 billion to US$3.7 billion.
- Fintech Deal Volume: Increased in the Americas from 1,066 to 1,123 deals, and in ASPAC from 406 to 438 deals, but dropped in EMEA from 804 to 689 deals.
- Global M&A Deal Value: Totalled US$32.6 billion across 264 deals globally in H1’24, with the Americas attracting US$26.8 billion across 130 deals, EMEA US$5.5 billion across 102 deals, and ASPAC US$310 million across 31 deals.
- Global VC Investment: Reached US$18.3 billion in H1’24, with the Americas seeing US$9.3 billion, EMEA US$5.4 billion, and ASPAC US$3.4 billion.
- Global PE Investment: Totalled US$979.5 million in H1’24, with the US accounting for US$568.9 million, EMEA US$402.8 million, and ASPAC US$7.8 million.
- Corporate CVC Investment: Accounted for US$8.5 billion in VC investment in H1’24, including US$4.4 billion in the Americas, US$2.23 billion in EMEA, and US$1.7 billion in ASPAC.
- Payments Sector: Attracted US$21.4 billion in fintech investment in H1’24.
- Regtech Investment: Reached US$5.3 billion at mid-year, surpassing the US$3.4 billion seen throughout 2023.
AI Investment Heats Up in Fintech
AI attracted significant attention from fintech investors in H1’24, particularly in the Americas. The US saw several large AI-focused deals, including the acquisition of cyber insurance company Corvus by Travellers for US$427 million and the acquisition of compensation platform Spiff by Salesforce for US$419 million. Other notable deals included a US$150 million VC round for corporate management company Ramp and a US$100 million VC funding round for investment management platform FundGuard. In China, AI-powered sustainability data company MioTech raised US$150 million in a VC round.
Payments and Regtech Investments Rebound
Following a slow 2023, both the payments and regtech sectors saw a solid rebound in VC investment in H1’24. The payments sector attracted US$21.4 billion, compared to US$22.7 billion throughout 2023, while regtech investment rose to US$5.3 billion from US$3.4 billion in 2023. In contrast, insurtech investment significantly declined in H1’24, attracting just US$1.6 billion, less than one-quarter of the US$8.2 billion seen in 2023.
Americas Shows Resilience Despite Investment Decline
Fintech investment in the Americas totalled US$36.7 billion in H1’24, slightly down from US$38.5 billion in H2’23. The US accounted for US$27.4 billion of this investment, including the US$12.5 billion acquisition of Worldpay by GTCR and the US$4 billion buyout of EngageSmart by Vista Equity Partners. Due to significant deals like Advent International’s US$6.3 billion acquisition of Nuvei, Canada’s fintech investment reached a record high of US$7.8 billion for H1’24. Conversely, Brazil experienced a quieter period, attracting US$616 million in H1’24 compared to US$1.8 billion in H2’23.
ASPAC Region Faces Slowdown
Fintech investment in the ASPAC region fell from US$4.6 billion in H2’23 to US$3.7 billion in H1’24. Smaller deal sizes contributed to the decline, with the largest deal being a US$280 million VC raise by China-based Yi’an Enterprise. Other significant deals included a US$209 million VC raise by India-based KreditBee, a US$195 million VC raise by Thailand-based Ascend, and US$150 million VC raises by China’s MioTech and Australia’s Camms.
EMEA Region Sees Significant Drop
Fintech funding in the EMEA region decreased by 40%, from US$19 billion in H2’23 to US$11.4 billion in H1’24. Continued geopolitical uncertainty, including elections in the EU, UK, and France, combined with high interest rates, kept investment subdued. The UK accounted for the largest share of fintech investment in EMEA, with US$7.3 billion, including the US$4 billion buyout of IRIS Software Group by Leonard Green. Outside the UK, notable deals included the US$652 million buyout of Italy-based Banco BPM Gruppo and the acquisition of Switzerland-based Pagero by Thomson Reuters.
Early-Stage Deals Provide Optimism for H2’24
Despite a subdued investment environment, there is optimism for H2’24, particularly in early-stage deals. AI is expected to remain a hot area of investment as startups tailor AI solutions to the financial services sector. While deal volumes may continue to increase, average deal sizes are likely to remain smaller compared to historical norms due to the high cost of capital and the approaching US presidential election.
