Capital one buys Brex for $5.15 billion in major fintech deal

Capital One announced on Thursday that it is acquiring the payments startup Brex for $5.15 billion. This is the latest major deal led by the bank’s CEO, Richard Fairbank.

The company revealed the acquisition in its fourth-quarter earnings report. The deal will be paid with 50% cash and 50% stock. Brex was previously valued at $12.3 billion. After the announcement, Capital One’s shares fell by about 3%.

Richard Fairbank, one of the few founder-CEOs of a large U.S. bank, has made several big acquisitions. Last year, Capital One bought Discover Financial for around $35 billion. This deal was seen as his biggest achievement, as it gave Capital One access to a large payment network.

“Since our founding, we set out to build a payments company at the frontier of the technology revolution,” Fairbank said in a statement. He added that acquiring Brex will help Capital One grow faster, especially in business payments.

Fairbank also said that Brex was one of the first fintech companies to combine corporate cards, banking, and spending management software into one system. He described Brex as a rare example of a fintech firm that built a fully integrated technology platform.

However, Brex’s valuation has dropped by more than 50% since 2023, showing the difficulties faced by many fintech companies, even successful ones.

Brex became well known during a time of low interest rates. At first, it focused on providing credit cards and loans to startups. Over time, the company expanded into other industries and now serves both startups and large companies, including Robinhood, Zoom, and Anthropic.

Capital One has offered business credit cards for many years, but it became convinced that Brex’s approach would be more successful, according to a source familiar with the bank’s strategy.

Brex CEO Pedro Franceschi said that the company did not need to sell, as it was growing strongly. However, he explained that combining Brex’s technology with Capital One’s size and resources would allow the business to grow faster than it could on its own.