The plaque may be made public after the sale failed at Visa

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Chances are low that Plaid is looking for another merger partner, now that its $ 5.3 billion sale to Visa is off.

Instead, fintech is more likely to go public through a traditional initial public offering, a special purpose purchase vehicle or a direct listing, said five fintech bankers and venture capitalists Barron’s.

“It is possible for Plaid to make an IPO or receive a SPAC,” said a venture capitalist.

“It’s the city of SPAC,” added another banker.

A Plaid spokeswoman declined to comment.

SPACs have emerged as the busiest sector of the IPO market. There were 248 so-called blank check companies that went public in 2020 – more than half of all IPOs that year – raising $ 82.3 billion, Dealogic said. $ 82.3 billion represents almost 50% of the $ 167.4 billion raised by the entire IPO market in 2020.

Vacuum verification companies have been aggressive with fintechs. Earlier this month,

Social capital Hedosophia

(ticker: IPOE), the latest blank-check venture capital firm Chamath Palihapitiya, has agreed to merge with online personal finance company Social Finance or SoFi in a $ 8.6 billion deal. USD.

Foley Trasimene Acquisition Corp. yl

(BFT), SPAC from William P. Foley II, buys the Paysafe payment platform for $ 9 billion in December. United Wholesale Mortgage, a leading mortgage lender, merges with Gores Holdings IV (GHIV), the Gores Group’s blank check company, in a $ 16.1 billion transaction. United Wholesale is scheduled to trade on the New York Stock Exchange later this month.

Founded in 2013, the Plaid platform allows users to connect their bank accounts to fund applications and transfer money. For example, Plaid technology allows Venmo customers to pay their friends and family. Plaid works with other well-known fintechs, including the Robinhood investment platform; Transferwise, which offers international money transfers; and Coinbase, a digital currency exchange. It has 600 employees.

Fintech in San Francisco raised $ 310 million in funding. That includes a $ 2.8 million seed round in 2013 and a $ 12.5 million round in 2014, Crunchbase said. Both Visa (V) and

MasterCard

(MA) has invested in Plaid’s $ 250 million C-Series round in 2018.

“It will be difficult for Plaid investors to wait too long for an exit, given how close they have come,” said a second banker, referring to the close sale of Visa.

Plaid’s spokesman said its investors “are committed to supporting Plaid as an independent company and our long-term growth trajectory”.

Visa agreed in January 2020 to buy Plaid for $ 5.3 billion. The deal, which did not include a parting fee, would have been the biggest Visa ever. The companies agreed late Tuesday to end the $ 5.3 billion deal after the Justice Department sued to block the deal. DOJ claimed that the acquisition will allow Visa to eliminate a competitive threat to its online debit business before Plaid has a chance to succeed. “Now that Visa has abandoned its anti-competitive merger, Plaid and other future fintech innovators are free to develop potential alternatives to Visa’s online debit services,” Assistant Attorney General Makan Delrahim said in a statement.

Visa, in a separate statement, said she was confident she would have won the dispute. But the pace of a multi-annual regulatory review “was not compatible with the fast-moving realities of a business – and the delay in closing for another year or more is not in the interests of our customers, the financial system or consumers themselves,” said Zach Perret , co-founder and CEO of Plaid, in a blog post.

Plaid’s customer base has grown 60 percent in the past year as more people go digital, a spokeswoman said. The Covid-19 pandemic has caused many consumers to no longer want to use cash or physically enter bank branches. The plaid is focused on “building [its] products and continuing to accommodate the generous growth potential that exists for Plaid, as digital funding becomes more widespread, ”the spokesman said.

The DOJ visa lawsuit is the latest sign that regulators are worried about the power of the Silicon Valley giants

Facebook

(FB),

Microsoft

(MSFT) and

Alphabet

(GOOG). Facebook, in particular, has been widely criticized for allowing misinformation to spread on its website, which is said to have contributed to the attack on the US Capitol last week.

“I’m not surprised they beat him,” said Matthew Epstein, general partner and founder of Newbold Partners, a fintech-focused investment bank in the Visa-Plaid merger. Regulators are concerned that large technology companies are buying new start-up vendors at the beginning of their life cycle, Epstein said.

“The consensus in Washington is that antitrust rules have not been sufficiently enforced and that this is causing problems,” Epstein said. “The change of administrations will not change [the scrutiny]. Visa may have decided that this is a situation in which they cannot fight the mayor’s office. ”

Write to Luisa Beltran at [email protected]