Life.SREDA ‘fintech bank’ Arival eyes US bank acquisitions

A team at Singapore-based venture capital firm Life.SREDA, launching “fintech bank” Arival, is looking to acquire a bank in the US via the new entity, Managing Partner Vladislav Solodkiy told this news service.

by Natalia Lapotko l 15.12.2017, MergerMarket

Life.SREDA is also looking to find investors for this project, he added.

Arival aims to become the first crypto-friendly bank, allowing companies to cash out proceeds from initial coin offerings (ICOs) and providing the full spectrum of banking services including B2B financing and on-line trading, Solodkiy said.

A bank acquisition and business investments are likely to cost around USD 50m, Solodkiy said.

The team targets banks in the US because the majority of crypto-related deals cash out in dollars and it is hard to obtain a banking licence there, Solodkiy said. Small banks cost around USD 2.5m he said. Yet such acquisitions would require additional investment and Arival would rather acquire a more expensive bank with developed technology platform, he added.

Such a bank could cost between USD 15m and USD 20m, he said.

The team has already secured around USD 15m from fintech investors and is looking for more industry investors, Solodkiy said.

Arival aims to acquire a US bank in three to four months, Solodkiy said, adding that it is difficult to forecast the timeframe. It depends how the Federal Reserve System would respond to Arival’s application to operate its business model in the states.

Life.SREDA will not keep this bank in its portfolio, with the team working on the project doing so in an operational capacity, Solodkiy said. This team has a stock option plan linked to Arival’s progress versus milestones such as deal structuring, regulatory approval, bank performance, marketing efforts and profitability.

Arival plans to buy banks in Europe and Asia to operate in other currencies later, Solodkiy said.

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Vladislav Solodkiy l Managing Partner, Life.SREDA

Early investments by Life.SREDA, which Vladislav Solodkiy founded in Moscow in 2012 and moved to Singapore in 2015, included Fidor and Simple. The so-called challenger banks did well for Solodkiy — Simple was acquired by Spain’s Banco Bilbao Vizcaya Argentaria in 2014, and Fidor struck a deal with France’s Groupe BPCE in 2016 — but his more recent portfolio investments line up with his own grand ambition to put pieces of technology together in ways that could remake banking.

Life.SREDA is both a fintech investor and an ecosystem through InspirAsia, an accelerator working with several portfolio companies. Solodkiy has devised a platform architecture called BAASIS (banking as a service) and written an e-book, The First Fintech Bank’s Arrival.

To Solodkiy each bank is a combination of product and service offerings, and in the age of application programming interfaces, those options can proliferate. Bank operators thereby get more ways to provide uniquely tailored service packages, and with properly designed APIs, they can comply with regulations that vary from country to country. Compliance is particularly critical for those trying to serve multiple markets, where, Solodkiy says, the lack of a fintech infrastructure like his proposed BAASIS makes “the launch of each individual project disproportionately expensive compared to the U.S. and Europe.”