British payments technology firm, Pockit, is negotiating with the consumer banking arm of the UK challenger bank, Monese, to acquire it for a nominal sum, and inject capital into its direct-to-consumer operations to enhance regulatory capital and fund the integration with Pockit.
Although talks are progressing, they remain uncertain, with the potential for the agreement to collapse, said one anonymous source who spoke to Reuters. Neither Monese nor Pockit has publicly commented on the ongoing negotiations.
London-based Monese, which was valued at over £1 billion ($1.31 billion) in early 2020 and backed by HSBC, split its operations in May 2023. The company divided into two independent entities: its consumer banking arm, Monese, and its corporate business XYB. Founded in 2015, Monese has attracted over two million customers globally, focusing on individuals who face challenges accessing traditional high street banking services due to a lack of credit history.
Earlier this year, Sky News reported that Estonian venture capital firm Tera Ventures was supporting a plan to spin out Monese’s consumer arm as a standalone business. However, this agreement fell through in August, according to sources.
Monese, like many challenger banks, has struggled to achieve profitability. Prior to the company’s split, Monese posted a £30.5 million loss in 2022, a 70% increase compared to the previous year, according to filings with Companies House. Despite these financial difficulties, Monese managed to secure $35 million in funding from HSBC as part of its Series D round in September 2022.
In 2020, Monese had been in discussions to raise £100 million in funding at a £1 billion valuation, as reported by the Financial Times at the time. The potential acquisition by Pockit shows the ongoing efforts of UK challenger banks to navigate a challenging financial landscape.
