eToro approaches investment banks over IPO

via fnlondon (paywall)

Any deal could serve as a bellwether of investor sentiment towards companies with exposure to the crypto market

Social trading platform eToro has been holding talks with investment banks about a potential initial public offering — a deal that could serve as a test of institutional investor appetite for companies with exposure to the growing cryptocurrency market.

eToro is in early-stage discussions with a number of banks in the City of London about going public, according to bankers familiar with the matter.

The Tel Aviv-based company has strong ties to the UK capital, having joined Elite — the London Stock Exchange’s community for helping private businesses raise capital — in 2015.

eToro declined to comment.

The IPO discussions come just months after the group, which offers retail investors access to trading and investment tools online and on mobile, raised $100m for expansion into new regions and markets.

It followed this up last month by announcing plans to launch a cryptocurrency exchange amid growing demand for digital money and its underlying technology over the past 18 months.

The price of the world’s leading cryptocurrency, bitcoin, has risen and fallen dramatically this year, leading many sophisticated investors to declare their intention to stay clear of such volatile assets; regulators around the world are also paying ever more attention.

One of the people familiar with the IPO discussions said that a risk associated with going public was that the regulatory framework for cryptocurrencies is still nascent and developments could impact businesses such as eToro that operate in the market.

eToro is a member of trade association CryptoUK, which seeks to promote proper oversight and standards in the crypto market and requires its members to sign up to a code of conduct for doing so.

eToro was founded in 2007 by chief executive Yoni Assia with a “social trading” model that allows members to sign up and automatically copy the site’s top-performing traders, who earn a cut in return.

It claims to have more than 10 million day traders in 140 countries using its platform to buy and sell cryptocurrencies, stocks, commodities and exchange traded funds.

Its March funding round was led by China Minsheng Financial. SBI Group, Korea Investment Partners and World-Wide Investment Company were among other backers. Rothschild was the exclusive financial adviser at the time.

eToro is regulated by the UK Financial Conduct Authority and the Cyprus Securities Exchange Commission.

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