- Bank is reportedly in talks with blue-chip investment funds
- Share sale could value the digital bank at more than £3.5bn
- Monzo has 8.5m customers and launched in 2015
Monzo is in talks to sell a stake in the business for £300million which would make it the most highly valued digital bank in Britain, despite never turning a profit.
The bank is reportedly in talks with a pack of blue-chip investment funds about a share sale expected to value it at more than £3.5billion, according to Sky News.
However, talks are yet to conclude and concrete details of the sale are expected by the end of the year.
Insiders told Sky News that ‘fundraising would be conducted at a premium to the £3.5billion at which it secured capital from Abu Dhabi Growth Fund in late 2021.’
The bank is reportedly in talks with a pack of blue-chip investment funds about a share sale expected to value it at more than £3.5billion, according to Sky News
One person close to the fundraising effort said the raise was opportunistic in that the new capital would be used to accelerate its growth.
‘The company does not need the money other than to build the business faster,’ they said
In May, the group ramped up its provisions for debts turning sour from £14million to £101million.
The online-based bank, which expanded into the realms of buy-now-pay-later and consumer lending in 2022, said the sum was ‘in line with our growth in consumer borrowing.’
It added: ‘We’ll continue to see this trend as more customers join Monzo and borrow next year.’
The bank was founded in 2015 and has around 8 million UK customers.
In the most recent set of current account switching figures, it lost a net 9,080 customers between April and June 2023.
However, unlike many of the banks in the list, it doesn’t offer switching incentives.
Rival Starling Bank was founded in 2014. Starling has turned a profit for two consecutive years, whereas Monzo is yet to turn an annual profit, reporting a £116million loss in the year to February.
But despite that, amid higher interest rates and an upturn in customer deposits, Monzo saw its revenue double to around £356million in the last year and said it expects to make an annual profit next year.
The business also said it gained 1.6million new customers over the year to February period.
A potential fundraising round could be the last before a rumoured initial public offering, which would enable everyday investors to snap up shares.
Last month, Monzo revealed it would be offering an investment service – and it claims 200,000 people signed up within two days.
Monzo also offers business banking and savings accounts, including a 4.1 per cent easy-access rate and other savings deals linked to banks such as OakNorth and Shawbrook.
It offers a free account, alongside Monzo Plus which costs £5 per month and Monzo Premium at £15 per month, the latter of which offers phone and travel insurance.
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