Q3 2019 Sector Update Fintech Important disclosures appear at the back of this report GP Bullhound LLP is authorised and regulated by the Financial Conduct Authority GP Bullhound Inc is a member of FINRAConfidential 2 GP Bullhound is a leading technology advisory and investment firm, providing transaction advice and capital to category leaders We publish this quarterly fintech market report to provide quantitative insights into public and private market valuations across the transaction spectrum and qualitative insights into company business models, technology and customer trends Based in our London office, Claudio Alvarez heads up our fintech practice which has completed over 20 transactions involving both equity and debt We also feature some of the leading fintech companies and CEOs across sectors which we find interesting at the moment given the emergence of open banking, the importance of user experience and the prevalence of insurtech Several of our recent fintech advisory transactions and investments are showcased below Fintech perspectives EXECUTIVE SUMMARY Mambu PRIVATE PLACEMENT Bessemer Venture Partners 30 million LendInvest INVESTMENT FROM GP Bullhound Undisclosed Budget Insight ACQUIRED BY Crédit Mutuel Arkéa Undisclosed Extenda ACQUIRED BY STG Partners Undisclosed Monese PRIVATE PLACEMENT PayPal, IAG, Augmentum $60 millionConfidential 3 Key sector takeaways Recent fintech transaction trends Public market fintech analyses Fintech CEO commentary Appendix A: fintech trading comparables by category Appendix B: GP Bullhound fintech credentials often to zero. Initially Charles Schwab was the catalyst, quickly followed by TD, e-trade and others. Robinhood also made option trading free; in addition to their zero commission on stocks and ETFs Main rationale to reduce commission for traditional brokers is to fuel customer acquisition and monetise on different products (like asset management). Brokers who were dependent on commissions are likely to struggle Neo-broker firms like Robinhood, Freetrade and Bux have always been relatively cheap for investors, capturing an increasing share in the growing millennial market with differentiated user experiences and branding Trading commission fees are the casualty in the war for customer acquisition DATE: JUL-19 Private Placement $323M DATE: JUN-19 Commission-free trading launch DATE: SEP-19 Commission-free trading launch DATE: OCT-19 Private Placement $15MConfidential 8 Current trends in fintech 3 Historically digital banks have focussed on customer acquisition to drive revenue growth, expanding in multiple countries across Europe and the US In recent months we note digital banks launching a new range of lending products in a bid to compete with high street rivals and demonstrate their long-term sustainability to investors. In order to support lending activities large sums of capital are being raised by digital banks To date digital banks primary source of revenue has been interchange and membership fees fuelled by increasing customer numbers. We believe the market is moving from a winner takes all mentality to a focus on more traditional revenue sources, such as lending Key to building long-term sustainable lending products is customers transactional data. Digital banks with a higher proportion of their customers using accounts as a primary account, such as Monzo and Monese, are likely to have a first mover advantage Digital banks ramp up lending to drive monetisation DEAL DATE: JUL-19 Private Placement $400M DEAL DATE: JUL-19 Private Placement $100M DATE: AUG-19 Loans launch DEAL DATE: OCT-19 Private Placement $37MConfidential 9 Section 2 Recent fintech transaction trendsConfidential 10 0% 20% 40% 60% 80% 100% Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Americas Europe Asia Other 0 250 500 750 1,000 1,250 0 10 20 30 40 50 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Total capital invested (LHS) Volume (RHS) 0 50 100 150 200 250 300 350 0 20 40 60 80 100 120 140 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Value (LHS) Volume (RHS) M Current market capitalisation as of 30 September 2019 GP Bullhounds selected YTD fintech index market capitalisation 99.1 15.3 23.2 16.1 7.9 4.1 2.1 2.2 2.2 1.1 1.5 22.8 20.7 3.3 3.5 4.4 1.8 1.6 (1.1) (0.2) 121.9 35.9 26.5 19.5 12.4 5.9 3.8 3.0 2.6 1.1 0.4 0.3 Opening market capitalisation Change in market capitalisation Current market capitalisationConfidential 15 Revenue multiple trends last three years Source: Capital IQ as of 30 September 2019. 1 EV/Rev multiples except for online lenders which are computed as Market Cap/Rev multiples. Note: fintech Index constituents are: Paypal, Shopify, Square, Adyen, Market Axess, Xero, Envestnet, Q2, Blackline, Lending Club, Funding Circle, Ondeck Analysis of GP Bullhound fintech index valuations 4x 5x 6x 7x 8x 9x 10x 11x 12x 13x 14xSep-16 Jan-17 May-17 Sep-17 Jan-18 May-18 Sep-18 Jan-19 May-19 Sep-19 GPB Fintech Index - TEV/LTM Revenues GPB Fintech Index - TEV/NTM Revenues Mean: 9.5x Mean: 9.0x Mean: 10.2x Mean: 10.4xConfidential 16 Source: Capital IQ as of 30 September 2019 Note: Detail on companies included shown in Appendix Share price performance LTM Payments 15.0% Financial Data & Analytics 14.8% HR & Payroll 14.4% Banking Technology 14.9% Nasdaq (0.6)% LTM performance 70 80 90 100 110 120 130 140Sep-18 Nov-18 Jan-19 Mar-19 May-19 Jul-19 Sep-19 Performance 1 Month 3 Months 6 Months 1 Year Payments (9.8%) (3.1%) 9.9% 15.0% Banking Technology (8.4%) 2.8% 13.6% 14.9% Financial Data & Analytics (4.5%) (0.4%) 10.2% 14.8% HR & Payroll (5.4)% (5.7)% 3.3% 14.4% Nasdaq 0.5% (0.1)% 3.5% (0.6)%Confidential 17 Indicative trading valuation benchmarks EV/ 2019E revenue (1) EV/ 2019E EBITDA (1) 2019E EBITDA margin (1) Selected companies Verticals 2019E revenue growth (1) 7.7x 19.9x 32.9% Financial Data & Analytics 9.5% 11.3x 26.5x 36.1% Payments 20.3% 11.0x 26.8x 32.3% Banking Technology 21.4% 9.1x 28.4x 28.6% HR & Payroll 15.0% Source: Capital IQ as of 30 September 2019 (1) MeanConfidential 18 Section 4 Fintech CEO commentaryConfidential 19 CEO Profile BUX at a glance Founded in 2014, BUX is a developer of a mobile stock trading application designed to make trading and investing in the financial markets widely accessible The company is based in Amsterdam with an additional office in London and employees c. 110 people The company's application features commission-free stock investing and speculative trading for stocks- cryptos and forex-indices, enabling traders to easily discover and invest in the public markets “We offer a brand positioning, user experience and community that caters to a millennial market. Similar to neobanks, this is made possible by our own end-to-end technology stack. In addition to our CFD product (Bux X), we have now also launched a low / no commission trading product (Bux Zero) which has great momentum.” Nick Bortot FOUNDER & CEOConfidential 20 CEO Profile Brolly at a glance Founded in 2016, Brolly is a digital insurer, aiming to become the insurance choice for the next generation of consumers Brolly enables renters and homeowners to protect their valuables straight from their smartphone, pioneering customisable coverage and a monthly subscription that reduces in price each month to reward loyalty Phoebe Hugh is a former underwriter and product manager at Aviva, the UK's largest insurance company “The insurance industry is moving at a glacial pace - people are still buying the same products today as they were decades ago. Consumer expectations are not being met and the time for change is now” “At Brolly, we are upgrading insurance for the digital age. Our vision is to become the trusted insurer for people to cover everything in a simple monthly subscription” Phoebe Hugh FOUNDER & CEOConfidential 21 CEO Profile (1) Based on over 2,000 Trustpilot reviews and a TrustScore of 4.9 out of 5 Trussle at a glance Trussle is the UK's favourite (1) online mortgage broker: we provide a hassle-free way to get a mortgage. We help first-time buyers and existing homeowners save time and money securing a great-value mortgage online Our mission is to build a game changing product to make getting a mortgage fairer and faster Trussle is based in London and employees c. 130 people “With a background in real estate and finance, I thought Id be capable of going through the mortgage process myself. But after a month wasted with banks, brokers and comparison sites, I was left frustrated, hundreds of pounds out of pocket, and without a mortgage” “Through technology, design and our expertise, were making a traditionally cumbersome process smarter, faster and more transparent than anything else, without charging you a penny” Ishaan Malhi FOUNDER & CEOConfidential 22 Appendix A: fintech trading comparables by categoryConfidential 23 Source: Capital IQ as of 30 September 2019 Note: EV/Revenue multiples in excess of 50.0x, EV/EBITDA multiples in excess of 100.0x and P/E multiples in excess of 150.0x are considered not-material (“NM”) and are not included in average calculation Trading comparables Payments High Growth Omnichannel Payments PayPal 121,892 116,483 14.7% 18.2% 74.6% 18.9% 17.7% 26.9% 27.1% 7.5x 6.6x 5.6x 42.6x 24.4x 20.5x 77.5x 33.1x 29.4x Shopify 35,943 34,044 43.4% 34.1% n.a. 78.7% (6.4%) 3.9% 5.2% 31.7x 22.1x 16.5x n.m. n.m. n.m. n.m n.m n.m Square 26,461 26,327 (31.1%) 33.5% 2139.1% 51.4% 0.6% 18.2% 20.6% 8.0x 11.6x 8.7x n.m. 63.7x 42.1x n.m 80.1x 55.6x Adyen 19,530 18,122 (70.0%) 36.8% 57.5% 39.3% 10.9% 57.1% 58.2% 9.9x 33.0x 24.2x 91.1x 57.8x 41.5x n.m 89.4x 64.3x Pageseguro 15,161 14,640 122.1% 27.1% n.a. 33.1% (13.2%) 37.5% 39.2% 22.6x 10.2x 8.0x n.m. 27.2x 20.4x 74.9x 41.5x 31.3x Mean 15.8% 29.9% 757.0% 44.3% 1.9% 28.7% 30.1% 16.0x 16.7x 12.6x 66.9x 43.3x 31.1x 76.2x 61.0x 45.1x Median 14.7% 33.5% 74.6% 39.3% 0.6% 26.9% 27.1% 9.9x 11.6x 8.7x 66.9x 42.5x 31.0x 76.2x 60.8x 43.4x General Payments & Services Global Payments 47,708 53,055 64.3% 67.6% 46.0% 80.3% 39.1% 34.7% 37.4% 15.8x 9.6x 5.7x 40.3x 27.6x 15.3x 72.5x 25.9x 21.1x Worldline 11,485 11,765 37.7% 7.2% 64.5% 14.7% 20.8% 24.8% 26.6% 6.2x 4.5x 4.2x 29.8x 18.1x 15.8x 53.5x 36.0x 29.7x Nexi 6,404 9,289 (37.6%) 6.7% n.a. 14.7% n.a. 50.0% 53.8% 5.3x 8.6x 8.0x n.a. 17.1x 14.9x n.m 27.6x 23.2x Ingenico 6,085 8,143 26.2% 6.0% 27.7% 9.5% 17.7% 17.9% 18.5% 2.8x 2.2x 2.1x 15.8x 12.4x 11.3x 29.3x 17.9x 16.4x Cielo 5,210 8,020 (4.2%) (0.0%) (34.0%) 1.1% 38.6% 26.6% 26.9% 2.8x 2.9x 2.9x 7.3x 11.0x 10.9x 6.9x 11.1x 12.2x Network International 3,290 3,647 11.6% 13.3% 30.5% 17.7% 42.0% 49.2% 51.1% 12.2x 11.0x 9.7x 29.1x 22.3x 19.0x 0.1x 33.8x 27.6x EVO Payments 1,029 2,061 1.4% 9.0% 148.0% 11.9% 11.3% 27.7% 28.5% 3.7x 3.6x 3.3x 32.2x 13.0x 11.6x 17.4x 47.8x 39.6x Mean 14.2% 15.7% 47.1% 21.4% 28.3% 33.0% 34.7% 7.0x 6.0x 5.1x 25.7x 17.3x 14.1x 30.0x 28.6x 24.2x Median 11.6% 7.2% 38.3% 14.7% 29.7% 27.7% 28.5% 5.3x 4.5x 4.2x 29.4x 17.1x 14.9x 23.3x 27.6x 23.2x Payment Networks Visa 373,748 384,727 (8.7%) 11.3% 15.8% 13.3% 55.3% 70.2% 71.4% 14.9x 16.3x 14.7x 27.0x 23.3x 20.5x 45.3x 30.7x 26.4x Mastercard 275,524 277,349 12.5% 13.2% 14.6% 15.7% 59.5% 60.6% 62.0% 18.6x 16.5x 14.6x 31.2x 27.2x 23.5x 54.2x 35.6x 30.2x Mean 1.9% 12.3% 15.2% 14.5% 57.4% 65.4% 66.7% 16.7x 16.4x 14.6x 29.1x 25.2x 22.0x 49.73 33.2x 28.3x Median 1.9% 12.3% 15.2% 14.5% 57.4% 65.4% 66.7% 16.7x 16.4x 14.6x 29.1x 25.2x 22.0x 49.73 33.2x 28.3x Mean (ALL) 13.0% 20.3% 234.9% 28.6% 22.6% 36.1% 37.6% 11.6x 11.3x 9.1x 34.6x 26.5x 20.6x 43.2x 39.3x 31.3x Median (ALL) 12.0% 13.3% 46.0% 16.7% 17.7% 31.2% 32.9% 9.0x 9.9x 8.0x 30.5x 23.3x 19.0x 49.4x 33.8x 29.4x Market Cap (USDm) EV (USDm) Revenue Growth EBITDA Growth EBITDA Margin EV / Revenue EV / EBITDA P/E Company 30/Sep/19 30/Sep/19 18/19 19/20 18/19 19/20 CY2018 CY2019 CY2020 CY2018 CY2019 CY2020 CY2018 CY2019 CY2020 CY2018 CY2019 CY2020