Investment banks hold early IPO talks with $4.5 billion Fintech
- Investment banks have been in talks with Monzo about a future IPO, sources tell Insider.
- The London-based fintech has also been in discussions to increase its wealth and investment offerings.
- The $4.5 billion valued challenger bank is backed by Tencent and the Abu Dhabi Growth Fund.
A number of leading investment banks have held initial talks with British fintech unicorn Monzo about a public listing which could take place as early as next year, sources say.
Monzo, which was founded in 2015 and last valued at $4.5 billion, has fielded inquiries from banks interested in handling a potential IPO, three people familiar with the matter told Insider. The announcements are at an exploratory stage, and the new bank app is unlikely to go public until late 2024 or early 2025 at the earliest, the sources said.
A typical public offering can take between six months and a year, and sources stressed that there was no formal engagement with the banks yet given the pressured IPO market. A source close to Monzo said the initial interest in working with the company was flattering, but that the neo-bank was in no rush to go public.
Monzo declined to comment.
The European listing market was hammered in 2022 with IPO revenue down 80% year-on-year to 15.6 billion euros (around $16.5 billion), according to PwC data. Some investment banks have chosen to shed teams of employees focused on M&A and equity issuance in recent months, most notably Goldman Sachs.
Monzo has been growing over the past year, reporting a 250% increase in annual revenue to £440 million (around $531 million) in the twelve months to December 2022, according to an investor update seen by Insider.
Other European fintech challengers such as Starling Bank and Zopa Bank have made noises about going public, while smaller rival Atom Bank has also indicated it will explore an IPO. Fellow London-based rival Revolut has ruled out an IPO in 2022 due to poor market conditions.
Monzo, known for its bright, coral pink debit cards, recently posted a position as VP of investor relations. The job posting stated that the successful applicant would strategize on future financing rounds in private or public markets, “which will likely include our journey to an IPO.”
Monzo is believed to be well capitalized, following a $500 million funding round in late 2021 led by the Abu Dhabi Growth Fund alongside investors such as Coatue plus a further $100 million investment from Chinese giant Tencent.
Fintech has also been looking for acquisitions and partnerships in the wealth and trading area, two sources tell Insider.
Unlike competitors such as Revolut, the company does not yet offer trading or investment services to its 7 million users. Last year, the startup posted a job opening to hire a chief investment officer to build out that side of the business.
The bank eyed a deal to buy London-based brokerage app Freetrade last year but ultimately decided against a deal, a London-based source familiar with the matter said.
In addition, Monzo has held advanced talks with fellow UK fintech Wealth Kernel, a company that provides APIs for trading services, about a potential partnership that would see Monzo provide an equity investment in the startup, according to two London-based sources familiar with the matter. Talks about a deal are still ongoing and no final decision has been made yet, a source said.
Monzo and Wealth Kernel declined to comment.
Monzo is mainly focused on the UK market, and the bank expects to break even by the end of the year, having claimed it was cash-flow positive during 2022. The bank withdrew its US banking application in 2021, but recently indicated that it would a renewed pressure. over the Atlantic Ocean.
