An N26 investor wants to sell shares in the company.
(Photo: dpa)
Frankfurt, Munich Allianz X’s patience is apparently over: the Munich insurer’s holding company, which owns 5.3 percent of the shares in the Berlin smartphone bank N26, wants to part with part of the stake and accept a significantly falling valuation. Several insiders told the Handelsblatt. However, it is still unclear how high the proportion will be.
Allianz expects the neobank’s valuation to be as low as $3 billion, according to Manager Magazin and the Financial Times, which first reported on the intention to sell. In the most recent round of financing at the end of 2021, the smartphone bank raised 900 million dollars and, according to its own statements, was valued at nine billion dollars (about 7.7 billion euros).
Because of the turnaround in interest rates and the crash of technology stocks, many start-ups have recently had to accept high losses in value. At the payment service provider Klarna, the valuation fell by 85 percent to $ 6.7 billion in a financing round in the summer of 2022.
For N26, the planned sale of the shares is not only a major setback because of the lower valuation. From the point of view of those involved, the procedure shows how dissatisfied Allianz is with the development of the smartphone bank.
It may also be intended to encourage other investors to jointly increase the pressure on the N26 leadership or to encourage changes in management.
Authorities see problems with N26
The company has been struggling with a variety of problems for some time. German financial regulator Bafin believes that N26 has grown too fast for many years and has not evolved its processes and controls accordingly. In November 2021, the Bafin therefore sent a special representative to the bank and ordered that N26 be allowed to accept a maximum of 50,000 new customers per month.
According to financial circles, the authorities repeatedly made it clear in a recent conversation with the N26 management that they still see deficits. It is mainly about deficiencies in the fight against money laundering, said several people familiar with the topic.
In addition, the founders and bosses Valentin Stalf and Maximilian Tayenthal are also exposed to harsh criticism internally. In an email in February 2022, six executives accused the two of them, among other things, of “a culture of fear and blame” and “controlling behavior”. The relationship between the founders and the rest of the leadership team was “disturbed,” it said.
Allianz X would make a clear plus
Allianz X has also been dissatisfied with the development of N26 for a long time. “The growing pains are not good,” criticized boss Nazim Cetin in an interview with the Handelsblatt in March last year.
That was an unusually direct statement – investors are usually reluctant to make public statements about their portfolio companies. At the time, however, Cetin was still confident that the N26 management would find solutions to the existing problems. Allianz X is apparently no longer so convinced of this.
>> Read here: “It is completely unclear who does what in the company” – criticism of N26 bosses continues
A spokesman for Allianz X did not want to comment on the current case and pointed out that the investment company is constantly reviewing its portfolio. New investments are being made, on the other hand, investments are being divested. Allianz X currently holds shares in more than 25 companies worldwide. Most recently, $315 million was invested in Pie Insurance and $250 million in the Cyber Insurtech Coalition.
Based on a $3 billion valuation, Allianz X’s N26 stake would be worth around $160 million. In the event of a partial sale, the insurer would therefore make a significant profit. Allianz X invested around $30 million in N26 in 2018 and later participated in another round of financing, the Financial Times reported. From the point of view of transaction experts, it is most likely that an investment company will take over the shares from Allianz.
A spokeswoman for N26 said the smartphone bank had no knowledge of active share sales by existing investors. This also includes Allianz X. “We generally do not comment on decisions and standards that our shareholders may apply when evaluating the companies in their portfolios,” said the spokeswoman.
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