FinTech Acquisition 'Blank Check' IPO: Buzzy Name, Fuzzy Aim

Larry Abrams profile picture
Larry Abrams
188 Followers

Summary

  • There is circumstantial evidence that the aim of this FinTech "blank check" IPO is to acquire a company in the fast-growing prepaid gift and rewards card market.
  • But, this market has just entered a "post-plastic" and "post-internet" end-to-end mobile app world where it is highly uncertain who will succeed or fail.
  • Most blank check IPOs are aimed at turnarounds or spin-offs in static industries. This IPO is not.
  • We recommend waiting until an acquisition is announced before deciding to invest.

FinTech Acquisition Corp. (NASDAQ:FNTCU) is a special purpose acquisition company (SPAC) a/k/a/ a "blank check company" formed for the purpose of acquiring an established financial technology ("FinTech") company.

On December 12, 2014, FinTech filed an S-1 prospectus with the SEC announcing a forthcoming listing on NASDAQ under the symbol FNTCU of 10M units at $10/share with each unit consisting of one share of common stock and one warrant. Cantor Fitzgerald is the sole bookrunner.

We speculate that the aim of the CEO of this blank check company, Daniel G. Cohen, is to preempt disruption of a Philadelphia bank called The Bancorp (NASDAQ:TBBK). Daniel G. Cohen has been Chairman of the Board of The Bancorp since it was founded by his mother in 2000, the legendary Betsy Z. Cohen.

The Bancorp is the largest bank processor of branded gift and rewards cards in the country. This business is less secure now than ever as we have entered a "post-plastic" era of gift card origination and distribution where the choice of processing bank is being reexamined.

According to a Bankrate.com report, the $130 Billion gift card market is undergoing a rapid conversion from plastic to digital cards with "Fifty-nine percent of gift cards are now offered electronically, up 18 percent from 2010." And within digital, there is rapid shift from internet origination with email gifting and manual use to a pure end-to-end mobile phone app experience.

The digital origination of prepaid gift cards is a stampede now with Crunchbase listing 478 mobile payment startups at this time.

The distribution side is rapidly being consolidated by the dominant plastic distributors Blackhawk Network (HAWK) and privately-held InComm. Amazon.com (AMZN), PayPal (EBAY) and Stripe are lurking. Major brands like Target (TGT) and Nordstrom (JWN) are bypassing

This article was written by

Larry Abrams profile picture
188 Followers
Ph.D. Economics, Central California, retired

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it. The author has no business relationship with any company whose stock is mentioned in this article.

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