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US fintech capital raising activity declined sharply in 2016

Capital offerings activity in the U.S. financial technology space slowed considerably year over year in 2016, according to an S&P Global Market Intelligence analysis.

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The market witnessed only two IPOs completed in 2016, with Cotiviti Holdings and Bats Global Markets Inc. going public. Their aggregate combined offering size of $246 million compared to nine companies hitting the public market during 2015 with aggregate proceeds of $5.62 billion. A substantial portion of the year-ago figures stemmed from First Data Corp.'s $2.82 billion offering, which was the largest financial technology IPO since Visa Inc.'s $19.65 billion IPO in 2008.

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Common equity offerings among financial technology companies also declined considerably in 2016. There were 23 total offerings raising an aggregate of $563 million during the year, compared to 54 offerings raising $7.69 billion in 2015. The largest common stock offering was the $285 million offering by Ellie Mae Inc. in the third quarter.

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There was also a downward trend in preferred offerings, as the aggregate amount raised decreased to $309 million in 2016 from $874 million in 2015. The volume of offerings also slowed by one to 15. R1 RCM Inc. topped the preferred offerings chart in terms of size with a $200 million offering. That paled in comparison to the largest preferred offering in 2015, which saw NCR Corp. raise $820 million.

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There were 39 financial technology senior debt offerings in 2016, which collectively raised $11.15 billion. That compares to 56 such offerings in 2015 raising $40.83 billion. The average size of debt offerings fell significantly to $286 million from $729 million. There was only one debt deal of more than $1 billion — Fidelity National Information's third-quarter $1.25 billion offering. There were 14 offerings of more than $1 billion in 2015. That year also saw Visa raise $4 billion in a single debt offering, which was the largest such offering in the fintech space since 2000.