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BFD Expert Voices - Private Credit

BFD Expert Voices

Reps. Mike Flood and Wiley Nickel are pressing the U.S. Securities and Exchange Commission to approve options trading on spot bitcoin funds, per a letter sent to chair Gary Gensler obtained by Axios' Crystal Kim.

Why it matters: Issuers are still waiting to be allowed to launch options after the contentious January approval of spot bitcoin ETFs, which eked through an SEC vote only after a court ruling.

Now a bipartisan congressional duo is trying to ensure that the SEC "does not continue to discriminate" against those newly launched funds.

Zoom in: Approving options trading on bitcoin ETFs is "critical" and "crucial" to the investors the agency "seeks to protect," the document viewed by Axios reads.

"We urge you, without delay, to approve options on spot Bitcoin ETPs or to provide an explanation for the Commission's difference in treatment between options for Bitcoin futures ETFs — which are currently trading — and options for the spot Bitcoin ETPs," write Flood and Nickel, a Republican and Democrat, respectively.

The big picture: Many broad market stock ETFs get options trading approved a few days after they launch, but commodity trust-based funds endure a more arduous, often lengthier approval process.

That's because such products require sign-off from multiple government agencies, including the Commodity Futures Trading Commission.

Reality check: People close to the matter tell Axios that they expect the CFTC, not the SEC, to be the biggest hurdle to overcome.

💭 Crystal's thought bubble: Perhaps the CFTC should get cc'd on this one.

1 big thing: Pressing for bitcoin ETF options

image of yellow bird tweeting caution sign

Permira acquired a majority stake in Israeli fraud detection company BioCatch, valuing the company at $1.3 billion. 

Why it's the BFD: The deal represents significant returns for investors including Bain and Maverick in a slow exit market, Lucinda writes.

Catch up quick: Bain first invested in the company in 2020, valuing the business around $400 million, Bain partner Dewey Awad tells Axios. It gradually added to that stake, taking around 35% of the business.

The deal represents a 3x return for Bain, a source with knowledge of the matters tells Axios.

Founded in 2011, the company was also backed by Maverick Ventures, which first invested in 2018, when BioCatch was valued at about $100 million. 

BioCatch hit unicorn status last fall, with an investment from Sapphire Ventures. 

The latest: Some angels — who invested when BioCatch was valued around $20 million to $30 million — also sold to Permira in this round, says CEO Gadi Mazor.

Macquarie and Sapphire acquired secondaries in the company last year, and again in this round.

By the numbers: As of Q3 2023, BioCatch was generating $100 million in annual recurring revenue. BioCatch is also EBITDA profitable and cash-flow positive.

What they're saying: "Between Permira, Sapphire, and Maquarie (investing) in last six months, we have a cap table that looks to support from $1.3 billion to 3x or 10x that," Mazor says. 

Context: The deal comes at a time developments in AI are resulting in a boom in fraud — and fraud detection businesses are expected to fight back using the same technology.

Zoom in: BioCatch is also eyeing potential acquisitions, bolstering its chops in that space as well.

"I do think there is going to be a lot of consolidation," Mazor says, pointing to the fragmented ecosystem. "You have behavioral biometrics, transaction monitoring, orchestration and authentication — and big banks have to put together how those puzzle pieces work."

State of play: Socure acquired Berbix last year for about $70 million. Feedzai acquired Revelock in 2021. Entrust agreed to acquire Onfido this year.

Permira, which has a strong presence in Europe, is also expected to help the company expand there.

BioCatch nets returns for Bain Capital, Maverick at $1.3b valuation

The BFD: BioCatch's returns

Illustration of fingerprint patterns with a tracking target on the middle print.

🔲 Report: Federal prosecutors are looking at Block (NBC News)

Federal prosecutors are digging into internal practices at Block, discussing with a former employee alleged widespread and yearslong compliance lapses at Square and Cash App, NBC News reports.

The former employee reportedly provided documents showing insufficient information is collected from customers to assess their risks, that Block processed transactions involving countries subject to economic sanctions, and that it processed cryptocurrency transactions for terrorist groups.

❌ Prudential to shut down Assurance (GeekWire)

The insurance giant is shutting down Assurance IQ, five years after spending $2.35 billion to acquire the Seattle-based tech startup.

👴 Fraud targeting older Americans rose 14% in 2023 (PYMNTS)

Individuals 60 years and older reported 101,068 of these scams in 2023 and lost $3.4 billion to fraud, with the average victim losing $33,915, the FBI's Internet Crime Complaint Center (IC3) said. 

3. Credit score

Illustration of a dart in the bullseye of a dartboard that says "credit score."

Go deeper into our full database with the Axios Pro Deals Tracker.

• Altruist, a custodian for RIAs, raised $169m in Series E funding led by Iconiq Growth, with participation from Granite Capital Management, Adams Street Partners and Sound Ventures. It values the company at $1.5b. altruist.com

• Agora, a cross-chain governance platform, raised a $5m seed led by Haun Ventures, with participation from Seed Club, Coinbase Ventures and others. axios.link/3y22fN2

• SoBet, a Nashville-based sports betting creator platform, raised $3.7m in seed funding led by Third Kind VC. axios.link/4aUokvq

• Made With Intent, a British segmentation platform for ecommerce, raised £1.5m in seed funding. Mercuri led and was joined by Portfolio Ventures and Haatch. madewithintent.ai

• Birdwingo, a European investment app for teens, raised €1.2m from Bienville Capital and others. axios.link/4dkEfF0

• BVP Forge, a unit of Bessemer Venture Partners, acquired Mortgage Automator, a Toronto provider of private lending industry software. mortgageautomator.com

• Epos Now, a British point-of-sale systems and SaaS provider, hired BNP Paribas to explore strategic options, including a minority stake sale at a $1.5b valuation, per Reuters. axios.link/44rl9sD

• SumUp, a London point-of-sale payment processor, secured a €1.5b private credit loan package led by Goldman Sachs Asset Management. Other lenders include BlackRock, Apollo Global Management, Oaktree Capital Management and Vista Credit Partners. axios.link/4beUkuF

• Pleo, a Copenhagen spend management platform, secured a €40m debt financing facility from HSBC Innovation Banking UK. axios.link/3wio36q

4. Deals!

• Josh Glover, a former nCino exec, joined FloQast as president and CRO. axios.link/4dgBJjf

• Bronwyn Boyle has joined digital payments infrastructure firm PPRO as its chief information security officer. axios.link/3xY0aBQ

• Johan Bergqvist, former group CFO of European transportation startup Bolt, joined Banking Circle as group CFO. axios.link/3Wp4gNj

• Dan Blank has been named co-chair of Goldman Sachs' Global M&A group. Previously, he led Morgan Stanley's North American Industrials Investment Banking business. axios.link/3QrJvwQ

5. It's personnel

🌍 Situational awareness: Join Axios on May 21 and May 22 for our premier cross-continental events hosted in NYC and London. Guests include NYSE president Lynn Martin and Apax Partners co-CEO Andrew Sillitoe. 

Request an invitation and check out our lineup here, and let Lucinda know if you'll be in London that week.

 🤑 @Ryan is really starting to love YNAB.

 🧙🏻‍♂️ @Lucinda is concerned about Dumbledore's child-rearing ethics.

Thanks to Claire Rychlewski and Rob Reinalda for today's edits.

And thanks to you for reading this edition of Fintech Deals. Please tell your fintech friends about this newsletter. They can sign up here.

May 02, 2024

1 big thing: Pressing for bitcoin ETF options