Visa buys financial technology company Plaid for $5.3B

Visa is acquiring Plaid for $5.3 billion 2x its final private valuation		
			
		Alex Wilhelm					Ron Miller		
	8 hours

Visa will pay total purchase consideration of United States dollars 5.3 billion to acquire Plaid.

The San Francisco-based company, founded by Zach Perret and William Hockey in 2013, has technology that powers roughly 2,600 fin-tech apps-like Acorns, Betterment, TransferWise, Robinhood and Venmo-by linking users' bank accounts to more than 11,000 financial institutions. Bankers refer to companies like Plaid as "the plumbing" behind how these apps work.

Connectivity between financial institutions and developers has become increasingly important to facilitate consumers' ability to use fintech applications.

Al Kelly, CEO and chairman of Visa, says: "Plaid is a leader in the fast growing fintech world with best-in-class capabilities and talent".

"This acquisition is the natural evolution of Visa's 60-year journey from safely and securely connecting buyers and sellers to connecting consumers with digital financial services".

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The CEO of PayPal Dan Schulman also said that the combination of the two companies would provide their company with "exciting opportunities" to enhance their products, as Paypal has "strong relationships with both Visa and Plaid".

It was later revealed by Plaid that both Visa and rival Mastercard Inc were investors in that round. Plaid's business has the capacity to open new market opportunities for Visa both in the USA and internationally; Plaid will have more opportunities to deliver enhanced payment capabilities and related value-added services to fin-tech developers.

Visa and Plaid respectively used Lazard and Goldman Sachs as their financial advisors. It looks like the price paid was around double the valuation implied by Plaid's last round of funding, so Visa had to compensate its peers generously to have it all to itself.

Visa's shares closed 0.83% higher at $195.33 on Monday. Here's a slide from Visa's presentation summarising the thinking behind the move.

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