Monzo, the fintech which has become one of Britain’s biggest consumer banking groups, is this weekend putting the finishing touches to an expanded fundraising involving one of the world’s best-known technology investors.
Sky News has learnt that Monzo has agreed terms with Hedosophia, an early backer of Airbnb and Uber, for it to become a shareholder in the bank.
City sources said on Sunday that Monzo could announce as soon as this week that Hedosophia and Singapore’s Government Investment Corporation (GIC) were participating in an overall fundraising worth close to £500m.
The larger-than-expected round makes it one of the largest ever achieved by a British tech company.
One insider said that GIC was investing over £50m, with Hedosophia also committing tens of millions of pounds.
Hedosophia, which declined to comment, is an early-growth investor founded by Ian Osborne, who has backed some of the world’s biggest tech names over the last 15 years.
Among the British tech companies it has backed include Wise, the London-listed money transfer business, and Marshmallow, the insurance group.
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Monzo’s expanded fundraising is likely to mean that it will not require any further capital if it decides, as expected, to go public in the next couple of years.
The digital bank, which has millions of customers in Britain, recently secured a valuation in excess of £4bn after concluding the initial phase of its funding round.
Founded in 2015, it is now profitable and has diversified into investments and instant access savings accounts.
It now ranks as the seventh-biggest bank in Britain by number of customers.
The new fundraising was led by Capital G, the independent growth fund of Alphabet, Google’s parent company.
The company is among a new generation of banks which have emerged since the last financial crisis and begun to accumulate a significant share of the UK retail banking market.
Rivals include Starling Bank, which recently named a permanent chief executive to replace its founder, Anne Boden.
Revolut, which was valued at $33bn (£26.5bn) in a funding round in 2021, has yet to receive a UK banking licence despite more than a year 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.
Monzo 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.
Monzo is run by TS Anil, its chief executive, and chaired by Gary Hoffman, one of Britain’s most prominent bank executives.
On Sunday, Monzo declined to comment.
