Fintech
Mubadala favors the sale of fintech Wefox against the wishes of the founders
(Bloomberg) — Mubadala Investment Co. has proposed selling struggling insurance technology startup Wefox to British insurance broker Ardonagh Group Ltd. in a deal opposed by the German firm’s founders.
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Abu Dhabi’s sovereign wealth fund told Wefox shareholders it expects an offer from Ardonagh that would give the German company an enterprise value of as much as 550 million euros ($595 million), according to a Mubadala presentation seen by Bloomberg . Wefox was valued at $4.5 billion in a financing round led by Mubadala two years ago.
The Berlin-based company lost more than 100 million euros last year and will now face new capital needs of 70 million euros by the end of the current year, according to Mubadala’s presentation, addressed to the company’s main shareholders, including Chrysalis. Global Investments and Targets.
Wefox’s founders and some early investors oppose the deal because it would put them at risk of losing their entire investment, and they have lined up an alternative one, according to people familiar with the situation. Instead of a sale, they are proposing a new round of financing from existing investors, the people said, asking not to be identified because the talks are private.
Chrysalis and Target support the alternative deal proposed by Wefox’s founders, the people said. Chrysalis is working on a term sheet for a €50 million funding round, in which it would contribute €15 million, according to a separate Wefox presentation seen by Bloomberg.
Representatives for Mubadala, Wefox, Ardonagh, Target and Chrysalis declined to comment.
Mubadala’s proposed deal would split Wefox, which operates in eight countries and has more than 2 million customers, in two. Ardonagh would take control of the core of the company and offer some benefits if Ardonagh’s shares gain value. A separate company consisting of Wefox’s technology platform and Swiss operations would be created and owned by early investors and shareholders.
The plan would leave early shareholders at significant risk of losing their entire investment unless the new company became very profitable.
By contrast, investors who only joined Wefox through its 2022 funding round could end up getting paid more than they invested thanks to contractual provisions, known as liquidation preferences, that put them ahead of other shareholders on the order of payment in case of sale. .
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According to documents seen by Bloomberg, the proposals will likely be discussed at an extraordinary meeting of Wefox shareholders scheduled for June 28.
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