German Fintech Startup Acquires Rival as Dealmaking Heats Up

(Bloomberg) -- In a sign that dealmaking in the financial-technology sector may be heating up, a German fintech firm has made the rare move of acquiring another startup to beef up its customer base.

Deposit Solutions GmbH, a Hamburg-based company that enables consumers to move their savings around a network of 15 European banks to find the best interest rate, today acquired Savedo GmbH, a Berlin startup in the same field. The terms of the deal, which Deposit Solutions announced in a statement, were not disclosed.

The unusual transaction between the startups comes as banks themselves are circling fintech firms. Lenders and other corporations participated in almost a third of the funding rounds for European financial technology startups in the second quarter, a 31 percent jump from the same period in 2016, according to CB Insights, a New York-based research firm.  

In an April report produced by PricewaterhouseCoopers, half the banks surveyed worldwide said they’re planning outright acquisitions of fintech firms. That same month, BNP Paribas SA purchased Compte Nickel, a digital bank in France, for 200 million euros ($236 million).

Founded in 2011 by Tim Sievers, an economist and former investment manager, Deposit Solutions is one of a new breed of fintech firms that offer a "deposit marketplace." It connects savers with lenders throughout the European Union: by using its service, German consumers can move money to a Romanian bank, for instance, that pays a higher interest rate. Lenders such as Deutsche Bank AG can use the company’s software to connect with one another, and utilize the platform to gather deposits without bearing the costs of setting up operations in far-flung markets.

Deposit Solutions, which is backed by billionaire Peter Thiel’s Valar Ventures, says it has "mediated" more than 2 billion euros in savings deposits for 60,000 customers so far. European households have more than 10 trillion euros in savings deposits, according to the European Consumer Organisation, an EU agency.

With Savedo, Deposit Solutions will add 18,000 customers, 13 new banking partners, and a presence in Austria and the Netherlands. "Through the acquisition, we plan to further accelerate the international roll-out of our business-to-consumer business," Sievers said in a statement.

The deal may also help Deposit Solutions compete with Raisin GmbH, a Berlin-based company that’s become the No. 1 deposit marketplace in Europe, moving more than 3 billion euros on its site for 75,000 customers.

Both companies anticipate growth to surge next year. In January, EU policy makers will usher in new regulations that are designed to spur competition in lending by requiring banks across the bloc to open their systems to third-party vendors.

To contact the reporter on this story: Edward Robinson in London at edrobinson@bloomberg.net.

To contact the editors responsible for this story: Elisa Martinuzzi at emartinuzzi@bloomberg.net, Keith Campbell, Paul Armstrong