Digital bank Monzo is in talks to sell a new £300m stake

Monzo is in talks for a £300m-plus fundraising that would underpin its status as the highest-valued digital bank in the UK.

Sky News has learned that Monzo, which was founded in 2015 and now boasts 8.5 million customers, is in detailed talks with a pack of blue-chip investment funds over a share sale expected to value it at more than £3, 5 billion

The talks have not yet been completed and the identity of any new investors has yet to be determined by the company’s board, insiders said Thursday evening.

The company is expected to finalize the details of the share sale before the end of the year.

Insiders said the fundraising would be done at a premium of the 3.5 billion. GBP, which secured capital from the Abu Dhabi Growth Fund at the end of 2021.

That would be a rarity in technology finance markets, which have forced many companies to raise capital at deeply discounted valuations.

Rivals include Starling Bank, which is currently seeking a new permanent chief executive.

Revolut, which was valued at $33 billion. in a financing round in 2021has yet to receive a UK banking license despite months of talks with regulators.

Monzo has made a spectacular recovery from a difficult period two years ago when it emerged that the City watchdog was investigating potential violations of anti-money laundering and financial crime laws.

Although it remains loss-making, reporting a loss of £116m. in the year to the end of February, it is expected to be profitable this year – a major milestone for an independent digital bank.

Its latest fundraising is likely to be seen as the final round before Monzo unveils an initial public offering in which it will sell shares to the public.

Existing Monzo investors include Chinese group Tencent, Passion Capital, Accel and General Catalyst.

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Some of the bank’s current shareholders are said to be keen to invest more money at the new, higher valuation.

Sky News reported over the summer Monzo was revamping its corporate structure as it pursues an international expansion strategy that will act as a prelude to a multi-billion pound IPO.

Monzo Bank Holding Group was established to avoid the company being subject to criminal prosecution by UK regulators as it launches into new overseas markets.

It is now the UK’s seventh largest bank by customer base and has a small presence in the US.

Monzo’s rapid growth is being driven by new product development, including the recent launch of an investment service through a partnership with BlackRock, the world’s largest asset manager.

A person close to the fundraising effort said the increase was opportunistic in that the new capital would be used to accelerate growth.

“The company doesn’t need the money other than to build the business faster,” they said.

Monzo is chaired by TS Anil, its chief executive, and chaired by Gary Hoffman, one of Britain’s most prominent bank executives.

Monzo declined to comment.

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