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Nubank denies pursuing Monzo deal after reports valued fintech at up to £10 billion
Nu Holdings, the reported bidder behind an £8 billion to £10 billion Monzo valuation, said in a Sept. 30 filing that it is not pursuing a deal. Monzo's board now has to find that price among investors buying stakes of up to 15%.
The Investor · Invest desk
What happened
- According to the FT's sources, Monzo's other options were selling up to 15% to private equity groups or running a venture-style round in which investors take smaller stakes.
- Monzo made a pretax profit of £87.3 million on revenue of £1.7 billion in the year to March.
- Morgan Stanley bankers who spent much of last year preparing a Monzo listing are now working on an alternative strategy.
Compiled by The InvestorSomething wrong?How this is made
Why it matters
- decision Nubank is putting its effort into Brazil, Mexico, Colombia and the US, so its European presence stays at a Berlin engineering office for now.
- cost Investors buying a minority stake would be paying a price first floated with a strategic acquirer in mind, and they get no licence or customer base for it.
- contradiction The FT tied the £8 billion to £10 billion range to a Nubank sale, but Sky said a fundraise was also valued above £8 billion, so it is unclear how much of the price depended on Nubank.
"As a matter of general practice, the company does not comment on specific opportunities," Nu Holdings said in the filing, before making an exception "given the extent of recent media speculation" [2][1]. In Mexico, Nubank already has more than 15 million customers and, since July, permission to operate as a bank [13]. TechFundingNews described a Monzo purchase as a fix for a problem Nubank cannot solve by itself [17]. Its main European office is a technology and engineering centre in Berlin [11]. Nu Holdings has a market value of $65.5 billion [18], and the same report said any deal would probably have been paid in a mix of cash and shares [10].
Both routes Monzo has left sell minority positions [5]. The private equity route has a stated size of up to 15%. At £8 billion to £10 billion, that is £1.2 billion to £1.5 billion of stock [1]. A fund writing that cheque gets a share of earnings. It does not get a licence or a customer base to fold into its own. Monzo's £87.3 million pretax profit on £1.7 billion of revenue [7] works out to a margin of about 5.1% [4]. An £8 billion price is about 92 times that profit, and £10 billion is about 115 times [2]. The bank's first full-year profit came in 2024 [14].
I think the top of the £8 billion to £10 billion range belonged to a strategic bidder, and that minority money will price nearer the bottom or below it. The reporting itself contains the counter-case. TechFundingNews, citing Sky News, said that raising new money to expand in Europe also valued Monzo above £8 billion [6][16]. If that is right, the floor was set without Nubank, and the filing removes only the upper end of the range (or rather, it removes the one bidder with a reported reason to pay that much).
Private equity paying £8 billion or more for its stake would prove this view wrong. A venture-style round would prove less. Investors in that kind of round take smaller shares [5], so a high price per share costs them less in total. Anything below £8 billion, or a return to the listing that Morgan Stanley bankers spent much of last year preparing [8], would mean the figure needed a buyer like Nubank. Morgan Stanley and Qatalyst are running the process [9]. Diana Layfield, chief executive since February, has been cutting back Monzo's US business [15].
What to watch
- Whether a private equity group buys up to 15% of Monzo at a valuation of £8 billion or more.
- Whether Morgan Stanley's listing preparations resume now that Nu Holdings has ruled out a transaction.
- Whether another acquirer approaches Monzo with a reason like Nubank's to pay for a UK licence and customer base.