PETAH TIKVA, Israel, Jan. 12, 2021 /PRNewswire/ -- Migdal Insurance announces a step that places it on par with the world's leading investment institutions: establishment of the Next Generation Finance specialty fintech investment arm. This investment arm plans to invest at least 1-2 billion $ in fintech companies, startups and funds in the next two years, with the global perspective of a significant financial player.
Ran Oz, CEO of Migdal Insurance, said: "The growing fintech sector has recently gained substantial momentum and maturity. We are high achievers, aiming to position ourselves as a leading financial investor not only locally, but also globally. Maintaining an edge in this innovative field will allow us to generate high yields for savers and enrich our investment portfolio with the new generation of finance. This is yet another step in our investment strategy of a strong shift from traditional finance to innovative financial sectors that we deem as the future leaders of the finance industry. Having honed our expertise in this field over the recent months, accumulating extensive knowhow, we are now ready to launch an extensive investment operation."
Migdal views fintech as a significant growth engine and intends to channel a substantial portion of its activities and investments to this sector. To this end, Migdal has created a broad infrastructure for fintech investments, including processes for the examination of investment opportunities with leading global entities and the establishment of a professional team comprising fintech analysts and experts, which is personally headed by Guy Fischer Chief Investment Officer in Migdal Insurance. Moti Shatner, long-standing entrepreneur and esteemed senior consultant in fintech, who is among the founders of Bluevine, provides consulting and guidance to the investment arm.
Concurrently with the establishment of the investment arm, Migdal announces an investment of US$ 100 million in consumer loans in the United States. The investment will be carried out through Pagaya, a fintech company that manages investments in U.S. consumer loans using a technology-based decision-making process. The companies have also agreed on an option (soft commitment) for a future investment of US$ 150 million in the various instruments.
Changes in the business environment in recent years, and more notably during the coronavirus crisis, have significantly accelerated the development of fintech, which has achieved a significant foothold in the financial industry, challenging the existing order and affecting both organizations and consumers. Today, the fintech sector is commonly believed to have reached maturity and already comprises more than a few companies with a proven track record.
In 2019, investment transactions in fintech companies exceeded 3,280, aggregating more than US$ 150 billion, as reported by KPMG. According to CBInsights, within six months, from September 2019 to April 2020, the number of fintech unicorns increased by 76%, and their estimated value rose by 74%, from US$ 144.9 billion to US$ 252.6 billion. In September 2019, the global rate of adoption of fintech solutions by consumers was very high, most notably in developing countries, China and India leading the trend, with 87% of consumers implementing fintech technologies (as reported by EY). In the Western world, too, adoption rates were high, reaching 73% in the Netherlands, and 71% in Ireland and the UK.
Migdal plans to become a central player in this field, capitalizing on its advantage as a dominant institutional investor with the largest investment portfolio in the sector, its solid investment infrastructure, expert and experienced team and its close ties with investment entities in Israel and overseas, that enable it to identify diverse opportunities. Migdal will base its investments in fintech startups on equity and/or debt investment models and will continue to guide its portfolio companies, including in following financing rounds. The company intends to focus on advanced financing rounds, but may also consider some first-round investments.
Migdal will pursue opportunities in all fields of finance that are currently affected by the fintech industry, including insuretech, capital market trading, lending (in lieu of bank credit), personal finance (day-to-day money management tools), payments and debits, money transfers, blockchain, risk management and more.
For more details, please contact Michael Swift, Head of fintech investments, Migdal Insurance / [email protected]
SOURCE Migdal Insurance