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Fintech exits: Could this year mark the technology sector’s coming of age?

Xignite

Twice in December the New York Stock Exchange’s famous pillars donned the colours of alternative lenders on the day their shares began trading publicly.

Financial News First came Lending Club’s red banner, then OnDeck’s blue and turquoise, for initial public offerings worth $1 billion and $230 million respectively.

The closely watched deals marked a coming of age of sorts for fintech firms, many of which are still in the earliest phases of life. They also raised the question of what lies ahead for fintech exits in 2015.

While some venture capitalists and fintech firm founders see a small, but swelling pipeline of firms ripe for public exits, others say fintech has a long way to go before it truly comes of age.

Matt Harris, managing director at Bain Capital Ventures in New York, said: “I think we’re going to see – pending market availability – a lot more IPOs relative to private exits in 2015 when looked at against the historic average.”

 

Within alternative lending specifically, Harris said the normal ratio of private exits to IPOs was about nine to one. But now, he said: “I think in this category it will be way closer to 50:50. There’s a pipeline that’s small, but super-fast growing.”

Social Finance or SoFi, which refinances student debt, is expected to file for an IPO this year and P2P lending platform Prosper is another closely watched candidate for a float in the coming years, venture capitalists say.

John Locke, a partner at Accel Partners in Silicon Valley, which has invested in small business funding firm CAN Capital, said: “2015 is going to be a big coming-out year for fintech.”

In addition to IPOs, Locke expects to see more M&A from classic financial services firms seeking to acquire the next generation of technology.

Venture capitalists describe a spectrum of fintech firms ready for some form of exit, with payments and alternative lenders looking more developed but wealth management and investment platforms and insurance fintech firms less so.

Harris said: “Payments are in the seventh inning, lending is in the fourth and capital markets and investments are earlier still.”

Venture capital investments in fintech firms reached a new high of $5.3 billion in 328 deals globally last year, according to Dow Jones VentureSource, more than twice the level in 2013.

But fintech is still just a fraction of overall venture capital investment.

Data provider CB Insights, which tracks US-based venture capital rounds, estimates that investments across all sectors reached $47.3 billion in 3,617 deals during 2014, the highest level since 2001. The firm does not break out fintech investments separately. There were 101 venture capital-backed IPOs, up for the third consecutive year, according to CB Insights.

Greg Brogger, founder of online trading site SharesPost, which allows investors to sell stakes in private companies, said: “A lot of successful exits in the last quarter of the year paved the way for a certain amount of enthusiasm going into this year. There seems to be support for those in the public market.” He added, however, that many companies still preferred to stay private, mature further, stabilise earnings and avoid market shocks that could disrupt their valuations.

Questions unanswered

The increased investment and visibility of fintech firms as they go public has raised the question of how the market and investors think about the companies.

Accel’s Locke said: “Lending Club in many ways is a bellwether for a number of other fintech companies thinking about the public market. Lending Club is being seen as a tech multiple, not a lending multiple or speciality finance multiple and rightly so.”

Lending Club’s stock was down about 20% from its first day of trading as of Friday morning while OnDeck’s share price was down about 40% from its first day as a public company. Personal finance platform Yodlee, which went public in a $75 million float in October, was trading more than 30% below its opening price.

Not all analysts have been bullish on the prospects for publicly traded P2P businesses. Sterne Agee analyst Henry Coffee wrote in a note about OnDeck this month: “In some ways, the rapidly growing marketplace lending and P2P business reminds us of the US prepaid card business five years ago.” He was referring to two companies that saw growth slow after regulatory scrutiny ramped up.

Amber Dolman, a partner in law firm Goodwin Procter’s financial institutions group, said: “You’ve got all the same pressures of a technology company – high, high growth but not necessarily a proven history of profitability. But when you start dealing with fintech you get the regulatory overlay.”

Scott Raney, a partner at Redpoint Ventures, said advisory was another area that held promise but where there were still questions. Companies such as Acorns, which helps save small amounts of money, and personal finance firm Personal Capital, are examples of firms on the rise in this sector.

Raney said: “They’re scaling [assets under management], they’ve had some very successful financings and are on nice trajectories, but there are still some questions left unanswered. Their models are based on AUM and they need a lot of accounts. How do you scale the acquisition of and managing those accounts?”

Public vs private

Looking at the roster of advisers on the three fintech IPOs in the third quarter, traditional investment banks, including Morgan StanleyGoldman SachsCredit SuisseCiti, and Bank of America Merrill Lynch are among the bookrunners.

But several fintech specialists say the decision to pursue a private versus public exit is largely driven by venture capital firms.

Dolman at Goodwin Procter said: “Before they listen to bankers, they’re listening to their investors and boards. The biases of a strategic investor on the board or private equity or venture capital fund is really going to guide the process as to whether or not the company is focused on an IPO or merger.”

Ex-bankers including former Citi banker Hans Morris, former Citi chief Vikram Pandit and former Morgan Stanley chief executive John Mack are among the advisers that are increasingly active in advising on investment in the sector and investing in fintech firms.

Stephane Dubois, chief executive of financial data firm Xignite, said fintech as a whole still had growing up to do before the market saw a spate of public exits.

He said: “I’m not anticipating a lot of IPOs in fintech in 2015. For a lot of the start-ups we heard about in 2014, it’s too early on.”

Source: Financial News

RECENT NEWS

Xignite, Inc., a provider of market data distribution and management solutions for financial services and technology companies, announced today it has enhanced the data coverage for its’ interbanks and interest rates APIs in preparation for the required transition from the London Interbank Offered Rate (LIBOR) benchmark interest rate at the end of 2021.

Used in financial products such as adjustable-rate mortgages, consumer loans, credit cards and derivatives, LIBOR has been the world's most widely used benchmark for short-term rates. But after the 2008 financial crisis the U.S. Federal Reserve recommended a new benchmark interest rate to replace the outdated and problematic LIBOR. In the U.S market the new benchmark is Secured Overnight Funding Rate (SOFR), which is based on transactions in the U.S. Treasury repurchase, or repo, market, where banks and investors borrow or lend Treasuries overnight. Other countries are introducing their own local-currency-denominated alternative reference rates for short-term lending.

Xignite banking, and Fintech customers that build apps for capital markets, investment management, financing, and foreign currency exchange purposes, require interbank and interest rates data to manage exchange and interest rate risk. Xignite enhanced its Interbanks and Rates APIs with SOFR earlier this year and has now added four of the alternative overnight risk-free rates (RFRs) recommended to replace LIBOR for currencies in respective markets. The new rates include Euro Short-Term Rate (ESTR), Swiss Reference Rates (SARON), Sterling Overnight Index Average (SONIA), and Tokyo Overnight Average Rate (TONAR). These additional rates are available now at no additional cost to customers.

“Our rates and InterBanks APIs were the first REST APIs ever released to serve the needs of the lending and banking industries. They uniquely aggregate rates that are used by dozens of firms globally in critical business processes,” said Vijay Choudhary, Vice President of Product Management for Xignite “Given the major shift the industry is experiencing regarding reference rates, it was critical for us to support those new rates to give our clients the data they need to run their businesses,” added Choudhary.

Xignite’s Interbanks API offers real-time and historical interbank and deposit rates for currencies in 40 countries. Xignite’s Interest Rates API provides interest rate data for over 600 global treasury, money market and private capital market instruments and benchmarks. The new alternative T+1 (24hr+ delayed) rates include:

  •         Europe: Euro Short-Term Rate (ESTR) is an interest rate benchmark that reflects the overnight borrowing costs of banks within the eurozone. The rate is calculated and published by the European Central Bank.
  •         Switzerland: Swiss Reference Rates (SARON) represents the overnight interest rate of the secured money market for Swiss francs (CHF). The rate is calculated and published by SIX.
  •         United Kingdom: Sterling Overnight Index Average (SONIA) is the effective overnight interest rate paid by banks for unsecured transactions in the British sterling.
  •         Japan: Tokyo Overnight Average Rate (TONAR) is an unsecured interbank overnight interest rate and reference rate for the Japanese yen. The rate is calculated and published by the Bank of Japan.

About Xignite

Xignite has been disrupting the financial and market data industry from its Silicon Valley headquarters since 2006, when it introduced the first commercial REST API. Since then, Xignite has been continually refining its technology to help fintech and financial institutions get the most value from their data. Today, more than 700 clients access over 500 cloud-native APIs and leverage a suite of specialized microservices to build efficient and cost-effective enterprise data management solutions. Visit http://www.xignite.com or follow on Twitter @xignite.

06/09/2021

Xignite, Inc., a provider of cloud-based market data distribution and management solutions for financial services and technology companies, today introduced XigniteGlobalCorporateActions, a new advanced API providing detailed corporate actions data for events such as stock splits, dividends, mergers, and spinoffs. The COVID-19 pandemic has led to a dramatic increase in corporate actions, annual meetings canceled, dividend payouts suspensions, and an accelerated company mergers and acquisitions rate. Knowing when a company plans to offer a split or undertake an acquisition is critical for buy-side and sell-side firms.

Corporate action processing is one of the “last frontiers of pain” for investment management, and one of the most manual and complex parts of back-office operations. The lack of uniformity and standards makes it difficult to identify and interpret information correctly. Obtaining accurate and timely information is challenging, and errors can result in painful financial losses. The XigniteGlobalCorporateActions is the first cloud-based REST API to eliminate the pains and complexity caused by legacy data feed and files. The API provides a single-source data stream with consistent information gathered from more than 190 exchanges and over 30,000 U.S. mutual funds.

The recent split of TSLA and AAPL stock on the same day illustrates the complex and far-reaching impact of corporate actions. If a firm does not do this correctly, it will show on historical charts, and their customers will notice. Xignite’s Data Quality team cross-validates our corporate actions data across sources and proactively detects and fixes any missing information. This prevents missing issues such as the TSLA and AAPL splits.

“The industry is facing a ‘perfect storm’”, says Vijay Choudhary, Vice President of Product Management for Xignite. “On one hand you have a massive wave of corporate actions fueled by the pandemic and the rising markets, and on the other you have millions of new retail investors eyeballing their investment applications all day long. One bad corporate action can send your customer service department into a tailspin,” added Choudhary. Additional detail on the Corporate Actions API endpoints:

GetDistributions - Returns cash and stock dividends as declared by the company for a requested security and date range.

GetDistributionsByExchange - Returns cash and stock dividends as declared by the company for a requested exchange and date.

GetEventSummaries - Provides a high-level overview of events for a requested security and date range.

GetMergers - Returns merger events for a given identifier and date range.

GetSpinoffs - Returns spinoff events for a given identifier and date range.

GetSplits - Returns the stock split history for a security for a specified date range.

GetTakeovers - Returns takeover events for a given identifier and date range.

Xignite

Xignite has been disrupting the financial and market data industry from its Silicon Valley headquarters since 2006 when it introduced the first commercial REST API. Since then, Xignite has been continually refining its technology to help fintech and financial institutions get the most value from their data. Today, more than 700 clients access over 500 cloud-native APIs and leverage specialized microservices-delivered modules to build efficient and cost-effective enterprise data management solutions. Visit http://www.xignite.com or follow on Twitter @xignite

05/18/2021

In the foreign metal market and the world of international rates, currencies play the crucial role of acting as the medium of exchange in the transactions that take place.

Currencies like the United States dollar, the Euro, or the British Pound are commonly used around the world in order to get a metal rate. Some companies that offer precious metal live and historical rates have exposed their APIs (Application Programming Interfaces) to allow developers to integrate current and historical metal rates, currency conversion, or other capabilities into their applications.

In order to know about precious metals live and historical rates, there’s a lot of APIs available online, and if you want to try one, Barchart is going to be one of your first options. But if you take a look at what else is in the market, you’ll find alternatives so many great alternatives:

Xignite Market Data Cloud Platform

Xignite Market Data as a Service was one of the first market data services built to run in AWS and they are one of the few vendors that is an AWS Advanced Technology Partner with a Financial Services Competency.

With more than a decade of cloud expertise in building, scaling and operating cloud-based market data technology, it is no surprise that leading financial services and capital markets firms rely on this company to empower their journey to the cloud. Their Metals API Service offers real-time prices and quotes for metals including Gold, Silver, Palladium, Platinum and other base metals. In addition to real-time precious metals prices, the service provides daily London Fixing prices as well as historical precious metal prices and metal news. 

Xignite Cloud APIs are sourced from leading providers such as FactSet and Morningstar as well as Xignite’s own curated, high-quality data.

Read the article Top 3 Alternatives for Barchart Precious Metals Rates

02/25/2021