Major investor in HSBC-backed Monese writes off its investment in money transfer app

Swedish VC firm Kinnevik has written off its investment in Monese but said there is “still significant value in the company", as Monese looks to raise fresh funds.
Major investor in HSBC-backed Monese writes off its investment in money transfer app

A significant investor in Monese has written off its investment in the money transfer app, as the fintech looks to raise fresh funds to ensure its survival.

Swedish VC Kinnevik, which owns over 20 per cent of Monese, made the write-off in Q4, 2023, a Kinnevik report shows.

C said:

“In this quarter, we have written off the entire carrying value of our investment in Monese. While there is still significant value in the company, the nature of our participation in its future is uncertain. This is what underpins our decision to write off our investment in full.”

When a fund writes off an investment, it effectively means the fund thinks that its investment in the company will not return money to the fund, so values it at zero.

Kinnevik, which also backs Scandinavian neobank Lunar and US robo-advisor Betterment, had previously slashed the value of Monese, valuing it around £203m in Q3, 2023, down by a third compared to the previous quarter.

Monese's other investors include HSBC, Paypal and fintech fund Augmentum and it reportedly once held Unicorn status. 

The London and Talinn-based startup, which has raised over £200m, has over two million customers and offers current accounts and money transfer services targeting expats and immigrants who typically struggle to get a traditional bank account.

The write-off follows Monese revealing in January this year that the business would be “potentially severely affected” unless it reaps in fresh funding.

Reporting losses of £30.5m in 2022, up 70 per cent on the year, Monese said:

“The group faces the risk that should such funding not be available, the ability of the group to conduct its operations in their current form will be adversely and potentially severely affected.”

The Kinnevik report adds that it is doubling down on its “highest conviction companies” amid a challenging 2023 and is building a “more concentrated” portfolio.

One expert familiar with the Monese business said they were surprised by the Kinnevik decision, pointing to the strong performance of Monese’s cloud-based core banking platform XYB.

The source said:

"It’s an odd decision to write it down fully as the company’s XYB business is doing very well so I am not quite clear on their rationale.”

Kinnevik said:

"The write-down reflects that Monese is one of the companies that we have chosen to take a step back from.

“The uncertain future this leads to in terms of our ownership causes us to write down the investment entirely even though there is an underlying value in the company.”

A Monese spokesperson said:

”Monese starts 2024 in a positive position on the back of strong performance in 2023 which saw continued revenue growth, and losses reducing from £30.5 million in 2022 to low single-digit millions.. Monese is approaching profitability in the near term.

"We have also made rapid and effective investment in XYB our cloud-based Platform as a Service (PaaS) business.”

Lead image via Monese.

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