UK digital bank Monzo is stepping up discussions with private equity firms over a potential sale of a significant minority stake after Brazilian fintech Nubank abandoned talks over a potential acquisition that could have valued the company at as much as £10bn, according to a report by the Financial Times.
Monzo has held early-stage discussions with CVC and Advent International about selling as much as 15% of the business, according to people familiar with the matter. The fintech is now understood to view a private equity investment as its preferred route to raising additional growth capital.
The move follows the collapse of negotiations with Nubank, which decided against pursuing a transaction after the two sides were unable to agree on valuation. Nubank is instead focusing on expansion in Brazil and the US, where it recently obtained a banking licence.
A private equity deal could provide Monzo with a larger capital injection than a conventional venture funding round, while allowing existing shareholders to retain exposure to the business. The company could still pursue a traditional fundraising from venture investors if a sponsor transaction does not materialise.
Monzo and Nubank, along with Advent and CVC, reportedly declined to comment.
