- Capital G eyes £4bn Monzo stake.
- Monzo nears £300m funding.
- Potential boost for UK fintech.
Capital G, a fund established by the parent company of Google, is in negotiations to acquire a £4 billion stake in Monzo.
Alphabet, the technology colossus worth $1.7 trillion (£1.4 trillion) that owns Google, is negotiating to acquire a stake in Monzo, one of the largest digital retail banks in the United Kingdom.
Monzo is nearing an agreement with Capital G, an investment fund that invests in rapidly expanding technology companies, to lead a funding round that will raise well in excess of £300 million.
Positive Consensus on Funding
This past weekend, city sources reported that Monzo had reached a positive consensus with Capital G and other new and existing investors regarding the fundraising process. The company had high hopes of completing the rounds by the end of the year.
The transaction, if finalised, will provide a significant lift not only to the digital lender but also to the fintech industry as a whole in the United Kingdom.
Approximately $4 billion (£3.2 billion) has been invested by Capital G in 55 companies, including SurveyMonkey, Airbnb, and Stripe.
Over a dozen of the companies in which Monzo has previously invested have since gone public; the company anticipates following suit within the next two years.
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Monzo’s Impending Valuation
Insiders estimated that Monzo would be worth more than £4 billion following the funding round, which would include the newly raised capital.
Unfinalised are the specific conditions, which comprise the valuation and the quantity of capital it procures, which falls within the bracket of £300 million to £500 million.
A valuation of approximately £4 billion would constitute a noteworthy accomplishment for the board of Monzo, especially considering the prevailing conditions surrounding fundraising activities for technology companies.
Additionally, this would solidify its position as the preeminent digital bank in the United Kingdom in terms of valuation.
Monzo, an enterprise established in 2015, presently serves an extensive portfolio of digital products and services — including investments — for its 8.5 million-strong clientele. This expansion is the result of a collaboration with BlackRock, the preeminent asset management globally.
Late in 2021, it last obtained capital from the Abu Dhabi Growth Fund.
Since the last financial crisis, a new generation of banks has emerged, including the company, which has begun to amass a substantial aggregate share of the UK retail banking market.
One of the competitors is Starling Bank, which is presently in the process of selecting a new permanent CEO subsequent to the departure of its founder, Anne Boden.
Despite engaging in months of discussions with regulators, Revolut, valued at $33 billion (£26.5 billion) in a funding round in 2021, has not yet obtained a banking license in the United Kingdom.
Since it came to light two years ago that the City watchdog was investigating Monzo for possible violations of anti-money laundering and financial crime regulations, the company has experienced a remarkable comeback.
Similar to the majority of startups, it incurred a loss of £116 million in the year leading up to February. However, it is anticipated to achieve profitability this year, which would be a significant achievement for an independent digital bank.
Monzo anticipates positioning its most recent funding round as the final round prior to its initial public offering, during which the company will sell shares to the general public.
Strategic Restructuring for IPO
In order to facilitate a stock market listing and advance its international expansion strategy, the organization has recently undergone a restructuring of its corporate framework.
To avoid British regulators’ punitive capital treatment in international markets, Monzo Bank Holding Group was created.
Tencent, an investment firm based in China, Passion Capital, Accel, and General Catalyst are among the current investors in Monzo.
Reinvesting capital at the revised, higher valuation may also appeal to some of the bank’s existing shareholders.
It currently ranks seventh in the United Kingdom in terms of consumer count and maintains a modest presence in the United States.
The raise, according to a source with knowledge of the fundraising initiative, was opportunistic because the funds would be used to accelerate the organization’s expansion.
Chief CEO TS Anil and chair Gary Hoffman, a leading UK bank executive, run Monzo.
