Monzo's Share Sale Set to Boost Valuation to $5.9 Billion

Digital bank Monzo is gearing up for a secondary share sale that could elevate its valuation to approximately $5.9 billion (£4.5 billion). This move comes shortly after the bank was valued at $5.2 billion during a fundraising round in May. The London-based fintech is providing its employees with the chance to sell some of their shares ahead of a potential increase in capital gains tax in the upcoming government budget.

Key Takeaways

• Monzo's valuation is expected to rise to $5.9 billion.
• Employees will have the opportunity to sell shares before a potential tax increase.
• Major investors like StepStone Group and GIC are involved in the share purchase.
• The bank has raised $610 million in funding this year.
• Speculation about an IPO is growing, despite CEO's reassurances.

Monzo is anticipated to announce the share sale on Friday, although a spokesperson for the bank declined to comment on the matter. The share sale is part of a broader strategy to provide liquidity to employees and capitalize on favorable market conditions.

This year, Monzo has successfully raised $610 million by selling shares to prominent investors, including CapitalG, a fund associated with Alphabet, and HongShan Capital, previously known as Sequoia Capital China. Other notable backers include Tencent, Passion Capital, the Abu Dhabi Growth Fund, Coatue, and Accel.

Future IPO Speculations

The latest share sale has ignited speculation regarding a potential initial public offering (IPO) in the coming years. Despite CEO TS Anil's attempts to downplay the likelihood of a public listing, the fintech landscape is shifting, with many British tech companies eyeing the U.S. market for higher valuations and greater access to capital.

Anil has not ruled out the possibility of listing Monzo in New York instead of London, reflecting a trend among tech firms seeking to maximize their market potential.

Financial Milestones

In June, Monzo achieved a significant milestone by reporting its first annual profit of £15.4 million for the fiscal year ending in March, a remarkable turnaround from a £116 million loss the previous year. This financial success underscores the bank's growth trajectory and its ability to adapt to a competitive landscape.

Founded in early 2015, Monzo has rapidly grown to serve over 10 million customers in the U.K., making it the seventh-largest bank in the country. It competes with other digital banks like Revolut and Starling, as well as traditional financial institutions such as Barclays and HSBC.

U.S. Expansion Plans

Recently, Monzo has reignited its efforts to expand into the U.S. market, appointing Conor Walsh from Block’s Cash App as its new U.S. CEO. This move follows a previous attempt to secure a banking license from U.S. regulators, which was ultimately abandoned. The renewed focus on the U.S. market indicates Monzo's ambition to tap into a larger customer base and diversify its operations.

As Monzo prepares for its share sale and continues to navigate the evolving fintech landscape, all eyes will be on the bank's next steps and its potential impact on the broader market.

Sources

• Digital Bank Monzo To Sell Shares At $5.9 Billion Valuation, Forbes.