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China’s Tencent takes stake in UK digital bank Monzo


Chinese tech group Tencent has taken a stake in Monzo, the latest international investor to join a funding round that values the UK digital bank at $4.5bn.

The move, revealed on Friday, underlines a rapid recovery in Monzo’s fortunes after a tough start to the pandemic that had crushed its valuation and even prompted outside warnings that it could struggle to stay afloat.

“With the backing of some of the best names in the investment community, we’re going into next year with big ambitions — and we’re just getting started,” said Monzo’s chief executive TS Anil.

Tencent, one of China’s biggest companies and most active tech investors, has built a significant global fintech portfolio, with deals in recent years including stakes in Argentine personal finance app Ualá, French start-ups Qonto and Lydia, and South African challenger bank Tyme.

Its investment in Monzo is part of a $100m top-up to a $500m round led by the Abu Dhabi Growth Fund, first reported by the Financial Times in early December.

The Chinese group’s move follows a £919m deal in July to buy UK games developer Sumo Group, which has made titles for Sony, Microsoft and Sega.

The Shenzhen-based owner of Chinese messaging service WeChat has been on an acquisition spree over the past year, diversifying its portfolio of global tech companies even as Beijing tightened its scrutiny of Chinese tech groups.

Monzo’s latest funding, first reported by Sky News, reflects a startling rebound in its valuation, which in February fell to £1.25bn after a precipitous drop in card transactions, down from £2bn in 2019.

The online bank announced a statutory net loss of £130m in 2020, an increase of 13 per cent compared with 2019. At the time, auditors EY warned for a second consecutive year of “material uncertainty” over its ability to continue operating as a going concern.

Monzo has also faced regulatory setbacks over the past year, including an investigation by the Financial Conduct Authority over potential breaches of anti-money laundering laws.

In October it withdrew its application for a US banking licence after regulators indicated it was unlikely to be approved.

But investors have focused on its successes, with revenues doubling in 2021 against the year before. A quarter of its revenues came from new products launched during the pandemic, including its business and premium accounts, as it seeks to diversify.

It is also exploring new developments such as a platform for retail investors to invest in stocks, according to people familiar with the matter. This could include cryptocurrency trading, although the planning is only at an exploratory stage.

However, Monzo’s valuation still trails its main UK digital rival Revolut, which achieved a $33bn valuation in a July funding round led by SoftBank’s Vision Fund 2 and Tiger Global Management.



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