Allianz X is reportedly looking to divest itself of its 5% stake in N26 and would like to jump ship, reports the Financial Times. A major announcement that could further jeopardize fintech plans at a time when fundraising is difficult, IPOs are dangerous and many neo-bank employees are resigning.
In order not to miss the fintech shift, the German insurer Allianz launched its venture capital subsidiary Allianz X in 2016. This had notably invested in the Berlin neo-bank which dreamed of embracing the European and American market, until until the regulator blocks its way and strategic errors cause it to fall behind its English competitors.
Among the departures, senior executives in strategic positions have been identified in recent months. The latest is the risk and compliance manager of the neo-bank, who preferred to leave after two years in office. He succeeds that of the former chief operating officer and the former chief financial officer. At the same time, between 2020 and 2021, employee turnover reached 40% according to a survey published by Sifted in January 2022.
The departure of a shareholder as big as Allianz X will be a stab. But N26 claims not to be aware of any “secondary sale of existing investors”.
68% discount
Seeking to resell its shares without waiting for N26 to go public will not prevent Allianz X from realizing a capital gain on its investment. It must be said that the subsidiary of the German insurer joined N26 in 2018, while the neo-bank still claimed 850,000 users. They are today more than 8 million if we believe the official figures (updated in October 2022). The 5% from Allianz therefore corresponds to a large check.
At least, if you don’t look at the previous months. Because with all its current difficulties, it would have been naive to believe that N26 would not have seen its valuation melt, like most fintechs today. And the Financial Times announces in this regard that Allianz X has sought to resell its shares at a commercial valuation of 3 billion euros, far from the 9 billion euros announced during the last fundraising in October 2021.
In terms of variation, this corresponds to a discount of 68%.
When Allianz invested in N26 in 2018, the startup was only in its Series C and was still valued at less than $1 billion. The insurer entered the capital of the fintech at the same time as Tencent, for a funding round of 160 million dollars. The insurer’s first signs of concern date back to last year when its chief executive told the US economic newspaper that he was concerned about growth targets.
The fact remains that N26 does not want to generate more external funding. The neo-bank said last year in October that it was not going to appeal to new fundraising despite having had to postpone its IPO project and that it was widening its net losses on the annual report for 2021. N26 is “well funded, independent of external capital and able to achieve profitability without additional funding”said one of the officials at the Financial Times.
The bank will certainly be able to hold, and even break even, but one thing is certain, it will not be able to do so by pursuing its objective of customer acquisition. At the time of the golden age of neo-banks (2019-2020), N26 set itself the goal of reaching 100 million customers.
The evolution of the number of customers at Revolut and at N26, in millions © Statista
