Alphabet fund spells bumper valuation for UK digital bank Monzo
Alphabet, the $1.7trn (£1.4trn) technology behemoth which owns Google, is in talks to take a stake in Monzo, one of Britain’s biggest digital retail banks.
Sky News has learnt that Capital G, an investment fund which deploys capital into fast-growing tech companies, is close to an agreement to lead a funding round that will raise well in excess of £300m for Monzo.
City sources said this weekend that Monzo was at an advanced stage of discussions with Capital G and other new and existing investors, and was hoping to conclude the fundraising before the end of the year.
If completed, the deal will represent a notable boost not only for the digital lender, but also for Britain’s wider fintech sector.
Capital G has invested roughly $4bn (£3.2bn) into 55 companies, including Airbnb, Stripe and SurveyMonkey.
More than a dozen of the businesses it has invested in have subsequently gone public – a path that Monzo is also expected to pursue in the next couple of years.
Insiders said the funding round was likely to value Monzo at more than £4bn, including the newly raised capital.
Precise terms, including the valuation and the amount of money it raises within a range of between £300m and £500m, are still to be finalised.
A valuation of about £4bn would represent a significant achievement for Monzo’s board, particularly given the current backdrop for tech company fundraisings.
It would also cement its status as the most highly valued digital bank in Britain.
The company is among a new generation of banks to emerge. Pic: Monzo
Monzo was founded in 2015 and now boasts 8.5 million customers, spanning a broad range of digital products and services which now include investments, through a partnership with BlackRock, the world’s largest asset manager.
It last secured capital from Abu Dhabi Growth Fund in late 2021.
The company is among a new generation of banks which have emerged since the last financial crisis and begun to accumulate a significant aggregate share of the UK retail banking market.
Rivals include Starling Bank, which is currently seeking a new permanent chief executive after founder Anne Boden stepped back from the role.
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Revolut, which was valued at $33bn (£26.5bn) in a funding round in 2021, has yet to receive a UK banking licence despite months of talks with regulators.
Monzo has recovered spectacularly from a difficult period two years ago, when it emerged that the City watchdog was investigating it for potential breaches of anti-money laundering and financial crime rules.
It has historically been loss-making in common with most start-ups, reporting a loss of £116m in the year to the end of February, but is expected to be profitable this year – a major milestone for a standalone digital bank.
Its latest fundraising is expected to be positioned as the final round before Monzo unveils an initial public offering, in which it would sell shares to the public.
It recently revamped its corporate structure as it pursues an international expansion strategy that will serve as the prelude to a stock market listing.
Monzo Bank Holding Group was established to avoid the company facing punitive capital treatment by British regulators as it launches in new overseas markets.
Existing Monzo investors include the Chinese group Tencent, Passion Capital, Accel and General Catalyst.
Some of the bank’s current shareholders are also understood to be keen to invest more money at the new, higher valuation.
It is now the UK’s seventh-biggest bank by customer numbers, and has a small presence in the US..
One person close to the fundraising effort said the raise was opportunistic in that the new capital would be used to accelerate its growth.
Monzo is run by TS Anil, its chief executive, and chaired by Gary Hoffman, one of Britain’s most prominent bank executives.
On Saturday, Monzo declined to comment, while Capital G did not respond to emailed requests for comment.
The first-ever Capture case has been delayed at the Court of Appeal as the Post Office asks for an extension to respond, Sky News has learned.
Pat Owen, a former sub postmistress who has since passed away, was convicted of stealing in 1998 based on evidence from computer software.
The system, known as Capture, was used in up to 2,500 branches in the 1990s, before the infamous Horizon system was introduced.
Hundreds of sub-postmasters were wrongfully convicted between 1999 and 2015 as part of the Horizon scandal.
Earlier this year, Sky News unearthed a 1998 report showing the Capture software was also faulty.
That report, commissioned by the solicitors acting for Mrs Owen in 1998, was served on the Post Office and may never have been seen by the jury in her case.
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‘All we want is her name cleared’
Ms Owen was given a suspended prison sentence and fought to clear her name subsequently – but died in 2003.
Her case was referred by the Criminal Cases Review Commission (CCRC) to the Court of Appeal in October.
The Post Office had until 5 December to respond to papers put forward by Mrs Owen’s defence team but they have now asked for an extension until 30 January.
Ms Owen’s daughter, Juliet Shardlow, described the family’s suffering at the lengthening wait.
“I need to emphasise the profound impact the ongoing delay is having on our family,” she said.
“The continuous uncertainty only compounds our heartache, stress, and anxiety.
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“It has become the last thing I think about before I go to sleep and the first thing when I wake up.
“We have waited 27 years for justice, and this additional wait feels never-ending.”
Ms Owen’s case is the first time a conviction based on Capture has reached the Court of Appeal since the scandal was exposed.
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Lawyers have said that if Ms Owen is exonerated posthumously, it may “speed up” the handling of others.
CCRC chair Dame Vera Baird also told Sky News in the summer it could be a “touchstone case” for other victims.
The CCRC is also continuing to investigate around 30 other “pre-Horizon” convictions.
A Post Office spokesperson said: “We have sought an extension of time to fully consider and respond to the CCRC’s Statement of Reasons in Ms Owen’s case.
“We deeply regret the impact our request for further time will have on Ms Owen’s family.
“We have a duty to carefully consider the evidence presented in the Statement of Reasons submitted by the CCRC and do everything we can to fully assist the Court when it considers this conviction.”
Meanwhile, the first-ever redress scheme for victims of the Post Office Capture IT scandal was launched this autumn.
The Capture Redress Scheme will provide payments of up to £300,000, and more in “exceptional” cases, to former postmasters who suffered financial losses.
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