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Allianz puts N26 stake up for sale at steep discount

Allianz has put its stake of about 5 per cent in struggling fintech N26 up on the market at a steep low cost that underlines the velocity at which excessive progress start-ups have fallen out of favour with buyers.

The enterprise capital arm of the Munich insurance coverage group Allianz X has mandated an adviser to supply its stake in N26 at a valuation of $3bn, folks acquainted with the matter mentioned.

That could be a low cost of about 68 per cent to the $9bn that buyers thought the corporate was price throughout its final funding spherical in October 2021.

Allianz X is without doubt one of the group’s largest exterior buyers, holding greater than 5 per cent of N26, public filings at Germany’s industrial register present. The agency constructed its place in 2018 when it invested alongside China’s Tencent Holdings, collaborating in a Collection C funding spherical that raised about $160mn at a valuation of lower than $1bn.

N26 instructed the Monetary Occasions it was “not presently conscious of any ongoing secondary gross sales from current buyers, together with from Allianz X”, including that it didn’t remark “on any inner insurance policies our shareholders could have when valuing corporations inside their portfolio”.

Allianz declined to remark. A 12 months in the past, Allianz X chief govt Nazim Cetin voiced concern about N26, telling German newspaper Handelsblatt that the “rising pains should not nice”.

FT calculations primarily based on public filings counsel Allianz might realise nearly $160mn for its stake, that means it will nonetheless greater than triple its funding over 5 years.

The decrease valuation might make it tougher for N26 to win further funds at a value near what it achieved in October 2021, when it raised $900mn from buyers together with Third Level and Coatue.

The 2021 funding was framed as a “pre-IPO spherical”. Nonetheless, after tech valuation plunged around the globe when rates of interest began to rise, N26 pushed again its ambition to record on the inventory market.

N26 is the most recent fintech to undergo as buyers grapple with rising rates of interest, excessive inflation and growing financial uncertainty. Swedish funds supplier Klarna final July raised €800mn at a valuation of €6.7bn, a drop of greater than 80 per cent in contrast with its earlier funding spherical. Late final 12 months, additionally slashed its inner valuation to about $11bn, from the $40bn it secured throughout a fundraising in January.

In October 2022, when N26 reported a 14 per cent enhance in internet losses for 2021, the Berlin-based financial institution mentioned it will not want new funding within the foreseeable future.

The financial institution instructed the FT that its plan to not elevate funds earlier than breaking even was on monitor. N26 was “properly financed, impartial of exterior capital and . . . in a position to attain profitability with out further funding,” the lender mentioned, including that it had been worthwhile for a number of years on a per-customer foundation.

N26 continues to be busy attempting to do away with an unprecedented cap on shopper progress that Germany’s banking watchdog BaFin imposed in late 2021 over flaws in anti-money laundering controls and its inner organisation. For greater than a 12 months, the financial institution has been allowed to just accept solely 50,000 new prospects a month in contrast with its earlier growth of 170,000 a month.

Within the gross sales pitch for the Allianz stake, its adviser says that the majority observers “agree this may quickly be resolved,” stating that the “consensus appears to [be] by Q3 this 12 months” and arguing that “the expansion will decide up strongly” as soon as the ban is lifted.

BaFin declined to remark.