Financial Technology Investment Banking + M&A Advisory

Financial Technology M&A Update

Q1 2017 Review May 26, 2017

Table of Contents

• M&A Market Brief – Page 3

• Global M&A Deal Value & Fintech Investment Activity– Page 4

• Fintech M&A Activity & Market Trends – Page 5

• Fintech VC Funding, Q1 2017 – Page 7

• 2017 Fintech Trends– Page 8

• Notable M&A Transactions, Q1 2017 – Page 10

• Publicly Traded Fintech Firms Valuation Table – Page 11

• M&A Spotlight: Paypal / TIO Network– Page 12 - 13

• M&A Spotlight: Green Dot Corporation / UniRush, LLC – Page 14 – 15

• M&A Spotlight: SoFi / Zenbanx – Page 16

DISCLAIMER

The information contained herein is of a general nature and is not intended to address the circumstances of any particular company,

individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such

information is accurate as of the date it is received or that it will continue to be accurate in the future. We perform our own research

and also use third party research. No one should act on such information without appropriate professional advice after a thorough

examination of the particular situation. This is not an offer or recommendation to buy or sell securities nor is it a recommendation

to merge, acquire, sell or exit a specific company or entity. We do not hold any equity or debt position in any of the securities listed

herein as of the date of this report.

Sources for our research and data include: PitchBook, MergerMarket, Wall Street Journal, Company Websites, SEC Filings, Bloomberg, TechCrunch, MergerMarket, Pulse of Fintech, Global Fintech Report

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M&A Market Brief Global, U.S. and Fintech M&A Activity Q1 2017

Worldwide

Number of global M&A deals tumbles in Q1 2017 while overall value rises

While the total number of deals announced fell by 17.9% versus the first quarter of 2016, overall deal value was up by 8.9% to a total of $678.5 billion. This dynamic fed through to lift average deal value to $403.4 million.

Key themes in evidence for the quarter were the spike in dealmaking in the consumer, healthcare and technology sectors, an enormous scaling back of activity from Chinese buyers and a drop-off of inbound European M&A.

Cross-border M&A deals featuring European targets fell 39% for the quarter, partly due to the impact of China's caution but also due to election uncertainty throughout Europe. The exception to this was in the U.S. where buyers of European targets hit a first quarter peak unseen since 2008.

High liquidity, access to cheap financing, healthy balance sheets and a need to demonstrate growth to shareholders via M&A all provide a positive outlook for 2017. Technology will drive M&A activity, with disruptive industries such as artificial Intelligence, fintech and the internet of things continuing to attract investor attention.

United States

Turmoil creates opportunity. U.S. M&A activity remains healthy and fundraising appetite strong.

There is ample cash on corporate balance sheets & $852 billion in global private equity dry powder,

Deal volume growth was slightly higher, increasing 0.9% (over 50 transactions) compared to the same quarter last year.

Total U.S. deal value and total deal volume for Q1 2017 stood at $7.9 billion and 235 transactions respectively.

FinTech

2017 started off modestly after a year marked by blockbuster deals.

Fintech deal value hit $3.2 billion in Q1 combining both venture and M&A investments. With a total of 260 deals closing in the space, the transaction volume steadies at a new subdued level observed over the past three quarters.

Major deals include PayPal's announcement to buy bill payment management company TIO neworks for $233 million in cash and $100 million acquisition of ZenBanx, a developer of multi-currency mobile banking platform, by SoFi.

The quarter also saw the second most highly valued fintech unicorn in the US, Social Finance (SoFi), raise $500 million at a $4.2 billion valuation.

Corporates move beyond traditional direct VC fintech investment and looked towards building partnerships and alliances with fintech companies.

Global fintech deal activity could surpass 2016's all time high if the rest of the year sustains Q1 2017's deal pace. US fintech deal activity is on pace to fall below 2013 levels at the current run rate as Europe fintech investment spikes.

Source: Global Fintech Report, Pulse of Fintech

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Global M&A Deal Value — Quarterly Comparison Source: MergerMarket 2017

Global investment activity in Fintech companies

Source: Pulse of Fintech, 2017 (data provided by Pitchbook)

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Fintech M&A Activity – globally a slower quarter

Source: Pulse of Fintech, 2017 (data provided by Pitchbook)

Fintech M&A Market Trends – Global comparision by type (#)

Source: Pulse of Fintech, 2017 (data provided by Pitchbook, * as of 3/31/2017)

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Fintech M&A Market Trends – Activity in the Americas

Source: Pulse of Fintech, 2017 (data provided by Pitchbook, * as of 3/31/2017)

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Fintech VC Funding Reaches $2.7B in Q1 2017

In Q1 2017, global VC-backed Fintech startups raised $2.7 billion across 226 deals, a rise of 33% on

a quarterly basis but 47% drop compared to same quarter last year. Deal Activity rose 12% to a

three-quarter high of 226. There were seven $50 million+ financings to VC-backed Fintech

companies in Q1’17 compared to 14 in the same quarter last year. The second most highly valued

fintech unicorn in the US Social Finance (SoFi) also raised $500 million at a $4.2 billion valuation.

Quarterly global financing trends to VC- backed fintech companies

Deals Amount($M)

Seed and Series A investment rebounded slightly in the quarter after the early-stage fintech funding had fell to a 7- quarter low in Q4’16. Funding to Insurance tech companies fell 25% on a quarterly basis as investments to blockchain and bitcoin companies rebounded to $113 million from last quarter’s $77 million. Payments tech companies also witnessed a 39% drop in funding while deals rose for the second consecutive quarter. Source: Global Fintech Report, CBInsights

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2017 Fintech Trends The race to harness fintech’s potential is still driving deal making. Fintech will continue to drive the evolution of financial services, disrupting some sub-sectors, enabling new developments in others and providing new and improved infrastructure for the digital age. Outlook for the future The focus of fintech primarily will be to remove friction from the customer journey with banks running in the background and more traditional experiences are expected to move from offline to online. As consumer purchasing habits evolve, a person’s smartphone will become more important than a physical credit card, especially with contactless card transactions and one-click online payments becoming a norm. Security and trust will hence continue to be the consumer difference makers. Fintech companies are maturing, particularly in payments and lending sectors, and hence are attracting more dollars. There is an increase in focus on expansion- geographic, product, services or a combination. Corporates are taking an opportunistic approach and are working to develop partnerships and alliance as traditional banks also look to extend their hybrid services model. Robo-Advisory continues to gain momentum with a movement beyond millennial focus towards targeting high net worth individuals and is likely to be a hot investment area. Another trend to watch is the rise of chatbots and artificial intelligence in fintech improving the everyday customer service interactions. Investment in insurtech is also likely to gain momentum, in addition to regtech. Blockchain is also expected to remain hot and is expected to spill out of the labs into real world. On the regulatory front, advances related to the proposed fintech banking charters will be a key area to watch as changes could have a major impact on the fintech market. Source: Fortune, Finanser and Pulse of Fintech

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Deal Drivers Perceived biggest deal driver for fintech deals (Top three, 1= most important)

Source: Fintech from threat to opportunity by White & Case Biggest challenge for Fintech deals (Top three, 1= most important)

Source: Fintech from threat to opportunity by White & Case

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Source: Solganick & Co. Analysis, Pitchbook

Notable Fintech M&A Transactions, Q1 2017

Deal Date Seller Buyer Description of the acquired company

Deal Size (million,

USD)

EV/ Revenue

EV/ EBITDA

February 14, 2017 TIO Networks Paypal

Provider of a cloud-based multi-channel bill payment processing and receivables management platform designed to process real-time customer account payments.

232.24 2.48x 20.6x

February 1, 2017 ZenBanx SoFi

Developer of a multi-currency mobile banking platform designed to eliminate the complexities of multi-currency transfer and international banking. The purpose of the acquisition is to leverage company's platform and underlying technology to expand SoFi's growing suite of online personal finance offerings.

100.00

February 28, 2017 UniRush, LLC Green Dot

Corporation

Provider of prepaid debit cards intended to lift Americans up and out to a financially secure future. The company's product, RushCard, is a general purpose reloadable prepaid debit card that offers Direct Deposit, money management tools to create budgets, track balances, and analyze spending enabling users to achieve their personal and financial goals

147.00

January 17, 2017 REDI Global Technologies

Thomson Reuters

Developer and operator of financial technology services. The REDI acquisition allows Thomson Reuters to incorporate an advanced, cross-asset execution management system into its buy-side trading capabilities and deliver integrated trading workflow solutions to the buy-side community.

March 10, 2017 Merchant Customer Exchange

JPMorgan Chase &

Company

Developer of mobile payment solution. The acquisition will help expand Chase Pay, the mobile and digital wallet for Chase customers.

February 23, 2017 Tilt.com Airbnb

Provider of a social crowdfunding platform designed to transform a neighborhood, a community, a city or even a nation.

60.00

January 18, 2017 Spark Finance Stock Twits

Provider of a user interface single screen service designed to track investment updates.

March 16, 2017 Acculynk First Data

Developer of online payment and authentication platform designed to unlock billions of consumers for in-country and cross-border online and mobile commerce. The acquisition expands First Data's robust eCommerce solution suite by providing access to Acculynk's PaySecure® debit routing technology

February 24, 2017 Skry Bloq

Developer of block-chain analytics and intelligence platform designed to manage, visualize and analyse blockchain data from disparate sources

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Publicly Traded Fintech Firms Valuation Table (as of 3/31/17)

Company Name Ticker

Symbol Stock Price

Market Cap ($mm)

EV/Revenue EV/EBITDA

First Data FDC 15.50 14,031 3.0x 12.9x

NCR NCR 45.68 5,652 1.4x 10.2x

FactSet Research Systems FDS 164.91 6,610 5.9x 17.1x

LendingClub LC 5.49 2,156 5.4x 11.9x

Square SQ 17.28 6,055 3.1x -

Shopify SHOP 68.09 5,884 12.4x -

Euronet Worldwide EEFT 85.52 4,463 2.2x 12.9x

Morningstar MORN 78.60 3,380 4.1x 11.6x

VeriFone PAY 18.73 2,075 1.5x 16.7x

HealthEquity HQY 42.45 2,488 13.2x 43.4x

Moneygram International MGI 16.81 1,047 1.3x 12.7x

Xero XRO 13.88 1,906 8.8x -

BlackLine BL 29.76 1,446 9.9x -

OnDeck ONDK 5.04 359 3.7x

Enova International ENVA 14.85 494 1.5x 8.9x

Average 5.16x 15.84x

Source: Solganick & Co. Analysis, Pitchbook (data as of March 31, 2017)

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M&A Spotlight

Source: PayPal news

Paypal acquires bill-payment firm TIO Network Corp through an all cash $233 million deal aiming to achieve a broader reach among underserved consumers February 14, 2017 – PayPal has agreed to acquire bill payment management company TIO Networks for $233 million in cash. The deal will allow PayPal to gain access to a market of customers who pay their utility and cable bills at kiosks in locations like Rite Aid. TIO is a leading multi-channel bill payment processor in North America and processed more than $7 billion USD in consumer bill payments in fiscal 2016. TIO serves 14 million consumer bill pay accounts* and offers convenient solutions for expedited bill payment services to financially underserved consumers. The company has more than 10,000 supported billers and numerous direct relationships with billers, which enable TIO to quickly process telecom, wireless, cable and utility bill payments for TIO’s customers. Using TIO’s approximately 900 operated self-service kiosks, approximately 65,000 retail walk-in locations, and mobile and web solutions, customers can conveniently pay their bills while avoiding the service interruptions and financial penalties associated with missed payment deadlines. Dan Schulman, President and CEO of PayPal, said, “By acquiring TIO and integrating bill payment into our global payments platform, PayPal adds another key service in our efforts to become a part of a consumer’s everyday financial life. Worldwide, more than 2 billion** people do not have affordable access to basic financial services, making it difficult and expensive for consumers to carry out basic financial tasks, including bill payment. TIO’s digital platform, and physical network of agent locations make paying bills simpler, faster, and more affordable. We are excited by the opportunity to extend this valuable service to our existing customers and welcome new billers and customers to PayPal.”

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This will help the company reach the “underserved” chunk of North Americans who are living paycheck-to-paycheck, some who even lack bank accounts. “There’s a chance to create a bridge for those users into the digital world,” as Bill Ready, COO of PayPal talks about the transaction. While they were unable to offer specifics on integration plans, the idea of bringing cash transactions to PayPal digital accounts is a concept that the company has been working on. The team has been developing PayPal Cash which makes it easier to convert your cash into online payments.

Expected Strategic Benefits of the TIO Acquisition

• Aligned with PayPal’s Vision: TIO supports PayPal’s vision of democratizing money by giving consumers more convenient and affordable ways to pay their bills.

• Expands Market Opportunity: TIO accelerates PayPal’s entry into bill payments with 14 million consumer bill pay accounts*, approximately 60 million transactions processed in TIO’s fiscal 2016 and a processing network that includes more than 10,000 billers.

• Extends Consumer Value Proposition: PayPal’s intention is to offer TIO’s valuable service to PayPal’s customers within its online and mobile experiences.

PayPal intends to fund the transaction with cash on its balance sheet. There will be no change to PayPal’s previously communicated fiscal 2017 guidance and three-year outlook based on the acquisition of TIO.

Source: https://techcrunch.com/2017/02/14/paypal-buys-tio-networks-for-233-million/ http://corporate.tionetworks.com/paypal-to-acquire-tio-networks/

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Green Dot Corporation has entered an agreement to buy UniRush, LLC – the company behind the popular RushCard prepaid debit card February 28, 2017 – Two of the oldest prepaid debit cards in the marketplace- Green Dot and RushCard join hands as the transaction settles for $147 million plus a minimum $4 million annual earn-out payment for five years post-closing. Green Dot Corporation announced that it has entered into an agreement to acquire UniRush, LLC, and its operating businesses RushCard, a leading online direct-to-consumer general purpose reloadable prepaid card provider, and Rapid! PayCard, a leading corporate payroll card provider. The acquisition, which maps to “Step Five” of Green Dot’s “Six Step Plan” to enhance shareholder value, materially expands Green Dot’s scale with the addition of the RushCard and Rapid! PayCard installed customer bases, while establishing Green Dot as a formidable player in the growing corporate payroll card and wage disbursement market. UniRush, LLC, which helped pioneer the prepaid debit card industry with the Prepaid Visa RushCard, one of the first general purpose reloadable prepaid debit cards in the marketplace, provides members with access to services that enable them to achieve their personal and financial goals. UniRush offers Americans an array of basic financial services via the RushCard. Said Steve Streit, Green Dot’s Founder and CEO, “As one of the largest and most successful FinTech banking franchises in America, Green Dot has proven its ability to efficiently integrate highly accretive acquisitions We believe the acquisition of UniRush, LLC, including the RushCard business and the Rapid! PayCard corporate payroll card business will be a strategic and financial success in both the near and long term. In particular, the RushCard program has for many years been one of the most important and respected prepaid programs in America with a mission espoused by its legendary founder, Russell Simmons, strikingly similar to that of Green Dot’s long time mission- to reinvent personal banking for the masses and to empower the unempowered. I am delighted to continue my long relationship with Russell and am eager to partner with the UniRush team to serve the customers we both care so much about while focusing on generating a strong economic return for Green Dot investors.”

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Business Synergies: As a direct-to-consumer online business, following the acquisition, the RushCard program will be consolidated into the “Green Dot Direct” division that houses GreenDot.com, GreenDot.com/Platinum Secured Visa Credit Card, WalmartMoneyCard.com, AccountNow.com, AchieveCard.com, GoBank.com and ReadyDebit.com. With the UniRush acquisition, Green Dot will rank among the nation’s largest mobile, online and direct mail “direct-to-consumer” providers of bank accounts, debit cards and related financial services. Furthermore, Green Dot expects the UniRush acquisition to enhance its Green Dot Direct division’s growth prospects amongst the tech-savvy urban and millennial consumer segments of the financial services market where the RushCard program has traditionally excelled. Rapid! PayCard, when added to Green Dot’s existing PayCard business and its growing 1099 wage disbursement business, is expected to rank the consolidated platform as a top 5 corporate payroll card provider nationwide, giving Green Dot the scale and expertise to become a formidable player in the growing corporate payroll card and 1099 wage disbursement space Source: http://www.businesswire.com/news/home/20170130006094/en/Green-Dot-Acquire-UniRush-LLC-Operating-Company

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Online lending platform Social Finance acquires Zenbanx to enable banking and money transfer services. February 1, 2017 – For a $100 million all-stock deal, SoFi has acquired Zenbanx, a startup that offers banking, debit, payments and money transfer services to users online and through a mobile app.

Zenbanx offers a variety of banking services, including savings and debit, money transfer and bill payment, and the ability to deposit or hold money in up to nine currencies. The combination of the two will allow SoFi to move deeper into the financial lives of its customers. While today it focuses on student-loan refinancing, mortgages and personal loans, integrating Zenbanx will allow it to provide an alternative to the traditional checking and deposit services most of SoFi’s customers today get from banks like Bank of America, Citi or Chase. The deal shows how SoFi is thinking about new ways to get customers hooked on its services.

SoFi and Zenbanx share a vision that banking should and can be better, and have built products and services to do it. With Zenbanx joining SoFi, we’re moving one step closer to becoming the center of our members’ financial lives by adding a SoFi checking product, and eventually credit cards, to our offerings for members.

“Zenbanx’s focus on a fast and simple mobile experience on top of solid banking technology makes them a natural fit for SoFi and our members, who demand to be able to manage their money whenever and wherever. They’ve also been at the forefront of conversational banking built into popular messaging apps, an area core to our current development” as Mike Cagney, CEO and co-founder for SoFi talks about the acquisition.

The majority of Zenbanx staff will be joining SoFi, and Zenbanx founder and CEO Arkadi Kuhlmann will join SoFi’s management team leading the development of new banking services. Zenbanx customers will be able to continue using their accounts until the new SoFi personal finance products are launched in a few months, at which point they’ll be transferred onto the SoFi platform.

Source: https://www.sofi.com/blog/sofi-our-acquisition-of-zenbanx/ https://techcrunch.com/2017/02/01/sofi-buys-zenbanx-to-offer-banking-and-money-transfer-services-to-its-users/

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About Solganick & Co.

Solganick & Co., Inc. is an independent investment banking and M&A advisory firm focused exclusively on the global technology and digital media industry sectors, including an active practice within FinTech. We advise buyers and sellers of companies and efficiently execute M&A transactions that help increase shareholder value. Our professionals have advised on $20+ billion in M&A transactions to date and have current clients and relationships globally with entrepreneurs, companies and leading private equity firms within the sectors we cover. Please contact us for information regarding this report or to inquire about an M&A transaction.

Los Angeles: 515 S. Flower St. Ste 500, Los Angeles, CA 90071 San Francisco: 71 Stevenson St, Suite 400, Los Angeles, CA 94105 Phone: +1 (310) 684-3130 www.solganickco.com Aaron Solganick, CEO Alexander Khoras, Director of Business Development aaron@solganickco.com akhoras@solganickco.com Rachael Fang, Vice President Alice Quintina, Associate rfang@solganickco.com aquintina@solganickco.com Michael Okayo, Senior Associate Tapsi Dubey, Associate mokayo@solganickco.com tdubey@solganickco.com Follow Us on Twitter: @Solganickco