It was a first sign. Crédit Mutuel Arkéa did not participate last summer in the new fundraising, for an amount of 170 million dollars, of the fintech Younited Credit. And this for the first time since the entry into the capital, in 2012, of this rising star of instant consumer credit, with now European ambitions. And, one after another, since the beginning of April, Arkéa has just given up control of its main nuggets in fintech, during the new funding rounds.
First of all, Budget Insight, the French leader in the aggregation of banking data, which has just raised 31 million euros from the American fund PSG Equity, relegating Arkéa to the rank of minority shareholder. However, this is one of its most recent acquisitions, in 2019. The same scenario, a week later, with the sale of Leetchi to the American fund Advent, much appreciated for its kitten, but whose great value is concentrated in its subsidiary Mangopay, which has established itself as a provider of payment solutions for marketplaces, the most vibrant segment of e-commerce.
Is it the end of an era? Arkéa was able to build a solid reputation in the 2010s as a bank for entrepreneurs, fintech fintech. In the period 2012-2017, the BCC alone concentrated 30% of investments in French fintech. And his portfolio was made up of the biggest hits, such as Younited Credit, Leetchi and Mangopay, Linxo, Grisbee, Yomoni or even Pumpkin. Up to 15% of its capital was then mobilized for private equity, a completely atypical situation in the banking landscape in France, where this ratio barely exceeds 5%.
This bold strategy was largely supported by one man, Ronan Le Moal, chief executive, who left the bank in February 2020 amid rumors of internal dissent. Its president, Jean-Pierre Denis, would leave the group a little over a year later. It is therefore a new team that now holds the reins of the mutual group, under the leadership of its new president, Julien Carmona, who came from the Nexity real estate group. With the program, the strategic review of the investment portfolio.
“These divestments are in no way the end of an ambition, but are the result of the combination of several factors”, explains Sophie Coulon-Renouvel, Crédit Mutuel Arkéa’s new director of external growth, strategic partnerships and digital.
“We started investing in start-ups in 2012 to participate in their development in booming markets. It was a real gamble then, while today it seems obvious. But these companies are not yet mature in their reference markets, which are now European, if not global “, she continues. Opposite, world giants of technology (GAFA …) and payments (checkout.com, Klarna, Paypal, Adyen, Visa, Mastercard …).
Ensuring European development
“Today, it is this reflection on our ability to support the European development of fintechs over time, with ever higher tickets, but also on our own experience in the implementation of international strategies that has led to a review of our main holdings”sums up Sophie Coulon-Renouvel.
“We work with many investment funds and we have noticed that there is a real competence to internationalize and it seemed very important to us to be accompanied by structures that know how to do it”, she adds.
And these structures are, for the most part, American funds, which benefit from sufficient size to invest tens of millions of euros, or even more, in a company. We regret in passing that French funds are still rare, above certain amounts, because they reinvest little in the various funding rounds, due to lack of sufficient size.
In fact, a fund must ensure that it diversifies its risks and, depending on its size, avoid an excessive holding that could unbalance its portfolio. And it is clear that on the recent important fundraising, it is the American funds (also Chinese with Tencent) that dominate.
“But we no longer need to go to the United States to attract funds. The American capital now comes to us with French teams. It’s a nice change in the attractiveness of the French fintech ecosystem that has taken place over the past decade.observes however Sophie Coulon-Renouvel.
However, Arkéa wishes to leverage its past investments and still maintains a minority stake in the companies it has transferred control of, without specifying the amount. However, Arkéa seems more involved in Budget Insight than in Leetchi / Mangopay.
“We remain minority shareholders, still present on the board of directors, to derive economic benefits, but also strategic ones, because we are interested in how these fintechs will now develop. And then, from an entrepreneurial point of view, we maintain very strong ties with the management teams of these companies. “confirms the banker.
Meanwhile Arkéa intends to renew its fintech investment portfolio, still focused on the transformation of retail banking, B2B, and therefore “the lookout” new opportunities, and especially new nuggets of tomorrow. Several announcements on these holdings are therefore expected by the end of the year.
However, Arkéa’s disengagement from successful fintechs is a strategic choice that raises questions about the banking sector’s ability to resist new entrants. But also on Arkéa’s autonomous strategy within the Crédit Mutuel group, whose financial surface is much larger. Some French banks have therefore chosen to support fintechs in their growth, such as BNP Paribas (Nickel) or Société Générale (Treezor, Boursorama, Shine, etc.).
However, the arrival of a new shareholder can be positive for fintechs interested in marking a new phase of their development, both financially and managerially. Especially since these professional investors do not necessarily have the same business plan, nor the same interests, as a bank.
Thus, the Advent fund is injecting, in addition to the acquisition of the Leetchi / Mangopay tandem, approximately 75 million euros. A stroke of luck that will essentially be dedicated to accelerating the development of Mangopay around three priorities: innovation, internationalization in Europe but also in the United States and, finally, recruitment, with the aim of doubling the teams, already quadrupled in four years, 60 to 250 employees today.
“We are best positioned on the market to respond to the complexity of the market’s payment flows”, estimates Romain Mazeries, managing director of Mangopay. In fact, what the startup’s strength does is to have immediately targeted online marketplaces, and consequently built its offer (2,500 platforms in its portfolio), while the payment giants, such as checkout.com, are just starting to take an interest in this segment.
“We were pioneers when the vast majority of the ecosystem was focused almost exclusively on e-commerce and transactions and not, like us, on managing payment accounts via wallets. Today it is a winning bet and our white label solution allows our customers to adapt payment flows and user experience, all on the same system “, summarizes the co-founder of Mangopay.
Son of DPS2
For him, the potential is enormous. The offer is still very fragmented, not only by country but also by verticals or types of payment. Very present in the circular economy (C2C), with Vinted or Le Bon Coin, but also in B2C (La Redoute, Rue du commerce, etc.), Mangopay intends to strengthen itself in B2B, which is still not very digitized.
In 2022, Mangopay is expected to process € 13 billion in transaction volume and manage over 30 million sellers on behalf of its clients. We are certainly still far from the 516 billion euro transaction of an Adyen in 2021 …
In the meantime, this son of the DSP2 (European Payments Directive that allows open banking) expects a lot from the current revision of the directive (DSP3): a text more oriented towards payment fintechs than neobanking and greater European standardization, in particular on the issue of combating fraud and money laundering.