Mergers and Acquisitions in the Financial Sector - Insights for September 2025
In the dynamic world of finance, private capital providers are increasingly focusing on early-stage fundraisings for Small and Medium-sized Enterprise (SME) lenders. This shift is evident in various sectors, with companies specialising in cross-currency management, SME finance, working capital finance, and factoring attracting significant investments.
Recent developments include Bain Capital Ventures participating in a US$33 million Series A funding round for cross-currency management company Grain (March 2025). Similarly, Finom secured an €92.7 million equity investment from General Catalyst (Customer Value Fund), while Froda was successful in a €20 million Series B funding round led by Incore Invest (April 2025). Knave, an automotive finance company, received an €100 million investment from XIFU Capital (June 2025), and Qashio, a corporate credit card and financial management company, secured a US$19.8 million debt and equity funding round (May 2025).
Funding rounds often comprise a mix of equity and debt across various sub-verticals, including SME lending and working capital finance. For instance, Flow48 raised US$69 million in a Series A debt and equity funding round led by Breega (February 2025), and Carmoola secured a US$100 million debt financing from NatWest (October 2024).
Established banks are also showing interest in leasing and seeking to conquer specialist niche markets. For example, Mediobanca acquired the remaining 40% of SelmaBipiemme Leasing, a financial leasing company (April 2025), and NLB acquired Summit Leasing Slovenija, a leasing company (August 2024). Alpha Bank acquired Flexfin, a factoring company (January 2025), and Paragon Bank purchased Five Arrows Leasing, a leasing company (August 2024).
M&A activity is limited in the current market, particularly in the UK motor finance sector. However, acquisitions have occurred, such as Victoriabank acquiring Microinvest, an SME lending company (April 2025), and Orbian acquiring Roger, a working capital finance company (January 2025).
Partnerships remain the preferred route for B2B Buy Now, Pay Later (BNPL) growth. Mondu entered into a JV with Payin3 and Lemonway for B2B payments and BNPL (April 2025).
The complexity of deal-making has increased significantly in the last 12 months. Notable examples include White & Case advising Switzerland-based financing platform Teylor on its acquisition of Grenke's factoring business, and the Deutsche WertpapierService Bank (dwpbank) agreeing to acquire the Berlin fintech lemon.markets, with the transaction expected to complete by autumn 2025.
However, not all news is positive. Santander delayed the release of its full UK results due to a court ruling on car loans (Financial Times-October 2024). The UK Financial Conduct Authority's consultation process has provided certainty for UK motor finance, leading to potential changes such as private equity exits, larger lenders deploying excess provisions, and medium-sized lenders reconsidering risk appetite.
Despite these challenges, the interest in specialty lenders and the use of debt, in the form of warehouses, revolvers, and notes, in deal-making, indicate a robust and evolving landscape for SME finance. MNT-Halan acquired Tam Finans, a trade finance company (July 2024), and Credion acquired CapSearch, a SME lending company (June 2025).
In the motor finance sub-vertical, debt-only fundraisings are common, such as Ayan Capital's £25 million Shariah debt funding from Partners for Growth (April 2025). Alsulaiman Group also acquired Taajeer Finance Company, an automotive finance company (June 2025).
In conclusion, the world of SME finance is witnessing a surge of interest from private capital providers, with a focus on early-stage fundraisings. This trend is reshaping the landscape, with established banks also showing an appetite for leasing and specialist niche markets. The complexities of deal-making notwithstanding, the future looks promising for SME finance.
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