Israeli social trading network eToro has repeatedly finalized a substantial secondary deal that takes the company’s valuation down to $2.5 billion, roughly a quarter of the value it aimed to achieve in a Wall Street IPO two years ago.
Israeli news agency Calcalist reported that eToro allowed current and former employees, along with early investors, to sell shares worth $120 million to some of the broker’s existing investors.
The buyers of these shares are two of the company’s largest shareholders, who had participated in eToro’s previous funding round and now intend to increase their ownership in the company. eToro itself is not directly involved in the transaction and will not issue any new shares or receive proceeds from the share sale.
In March, eToro completed its last funding round, raising $250 million at a valuation of $3.5 billion. The funding round was led by ION Group and Softbank’s Vision Fund 2, with participation from Velvet Sea Ventures and several other existing investors.
The company abandoned its plans to go public even after it lowered its SPAC valuation down to $8.8 billion from the earlier planned $10.4 billion, as market conditions changed and SPACs face more headwind.
Previously, eToro planned to go public through a merger with Betsy Cohen-backed blank-check company FinTech Acquisition Corp in a deal that would have valued the company at more than $10 billion. However, due to a downturn in equity and cryptocurrency prices, investors reevaluated their exposure to technology companies, and retail brokerages faced a decline in trading activity.
Going public through a blank-cheque company was originally scheduled for a Q3 2021 closing. However, meeting investors to pitch a direct listing has hit a bump and the deadline was pushed back to the fourth quarter as the SPAC boom was already fading away.
On a last-ditch attempt, eToro pushed back the completion of its reverse merger deal with the blank-check company backed by Betsy Cohen. Specifically, the deal deadline was extended from the earlier anticipated close on December 31, 2021 to June 30, 2022. Despite their ‘best efforts’, the parties haven’t satisfied the requisite closing conditions set forth in the original merger agreement, including eToro’s registration statement on Form F-4 to be effective.
