Monese has been acquired by fellow FinTech Pockit after HSBC became the latest investor to write off its investment.
Monese was founded in 2015 as the UK’s first app-based bank and has customers across Europe. It looked set to become a unicorn – valued at more than $1 billion – in 2020 when it entered talks to secure £100m in investment.
However it would fall further behind digital banking rivals Revolut, Monzo and Starling, with pre-tax losses widening to £30.5 million in 2022, despite revenue climbing to £27.7m.
Late last year investor Kinnevik wrote off its holding in the company, which subsequently warned there was “material uncertainty on the success of raising future fundraising” which undermined the business continuing as a “going concern”.
When HSBC recently wrote off its remaining stake just two years after injecting $35m into the firm as part of a strategic partnership, it entered a debt agreement with Pockit to secure working capital.
Now the companies have announced that Pockit, which provides digital accounts to 900,000 people ‘underserved’ by traditional banks, has acquired Monese, creating a combined customer base of around 3m people and generating almost £30m in annualised revenue.
Monese’s other investors are PayPal, Augmentum Fintech and International Consolidated Airlines.
The deal, subject to ‘change in control’ approval by the FCA, will see Pockit and its shareholders – led by Puma Growth Partners – make a significant injection of up to £15m in equity capital to fund the integration and future growth of the business.
Further financial terms of the deal are undisclosed.
Pockit says it will benefit from Monese’s regulatory infrastructure – including electronic money and consumer credit licences – and their complementary product offerings and geographic footprints. The transaction will allow Pockit to accelerate the roll-out of new services, such as Monese’s multi-currency accounts, on top of an existing product suite that includes digital accounts, salary advance and credit-building.
“There will be no impact on customers of either Pockit or Monese upon completion of the deal, with the two separate services continuing to run independently until a careful review and integration process has been completed,” they stated.
Pockit founder and CEO Virraj Jatania will lead the enlarged business. Norris Koppel, founder and CEO of Monese, will remain involved with the combined company post-completion to help ensure a smooth transition.
“This is a transformational acquisition for Pockit,” said Jatania. “It immediately propels us to a size where we can support financial inclusion for a critical mass of people who would otherwise be locked out of mainstream finance.
“While nothing will change for our 3m customers in the short term, over time this deal will result in new products and an enhanced in-app money management experience. We’re also delighted to be welcoming the talented Monese team that Norris has built to advance our shared mission of providing essential financial services in an accessible, transparent and affordable way.”
Koppel added: “This new era with Pockit is a fantastic way to build on our success and to scale our offering to more customers, and comes at a time when we are approaching profitability. These two businesses have closely aligned customer bases and missions, and are highly complementary in terms of products and geographic footprint.
“We are looking forward to working with Virraj and the wider Pockit team on the next chapter.”