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Goldman-backed lender Neyber in race to secure new funding | Business News

By February 14, 2020 No Comments
Neyber's services include loans to personalised payments. Pic: Neyber

A Goldman Sachs-backed lender which allows employees of companies such as Asda and Royal Mail to borrow against their salaries is racing to raise fresh funding.

Daily Week News has learnt that Neyber, which was founded in 2013, has been holding talks in recent weeks with prospective investors – including its biggest UK rival, Salary Finance.

Insiders said that discussions about an investment that would constitute a takeover by Salary Finance had been taking place for some time, although the status of those talks was unclear on Friday.

If the company cannot secure new capital, it could raise doubts over Neyber’s future, the insiders added.

In an email, Monica Kalia, one of Neyber’s co-founders, said: “Neyber is a thriving and ongoing business with over 2m customers.

“As a growing business, we are currently closing the funding for next phase of our development.”

Ms Kalifa and her fellow founder Martin Ijaha – both of whom previously worked at Goldman – declined to address specific questions about its ongoing funding discussions.

Any suggestion of financial travails at loss-making Neyber would be a blow to Police Mutual, its founding client and a substantial shareholder.

Police Mutual provides financial services to thousands of serving and retired police officers across Britain.

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Police Mutual is among Neyber’s founding investors. File pic

A presentation circulated to prospective investors outlined a February 10 target date for completing a recapitalisation of Neyber.

The presentation, which has been seen by Daily Week News, suggests that the company requires £5m of new equity to be invested alongside £8m already committed by management and existing shareholders.

To underline the apparently troubled state of Neyber’s finances, it indicates that – inclusive of the £13m of new money – the company would be valued at just £23m after a successful fundraising.

Neyber has built a respected reputation among its broad base of corporate partners, which according to its investor presentation include Tata Steel Europe and TalkTalk.

Others include Bupa and Harrods.

The fintech company has a total addressable customer base of more than 2m people – equivalent to 7% of the UK’s working population.

It says it has so far lent £190m to the employees of its 500 partners, and says its average loan size is just over £8000.

Since launching, Neyber – which describes itself as “the UK’s number one financial wellbeing provider” – has positioned itself as a cheaper consumer alternative to credit card companies and payday loan providers.

The APR – or interest – rate on its loans ranges from 3.9% to 18.9%, with an average term of four years.

Loans are then repaid directly from customers’ salary payments – a mechanism that Neyber says significantly reduces default rates.

Goldman backed the company through one of its private capital funds in 2017.

The investment comprised a small sum in equity and between £70m and £100m in debt drawn down by the Neyber vehicles which issue loans to consumers.

One source said Goldman’s direct shareholding in Neyber was “less than 5%” and that it was unlikely to commit further funding to the company.

Since backing Neyber, Goldman has invested in a number of other UK-based consumer finance start-ups, including the digital wealth manager Nutmeg.

It has also launched direct savings products in Britain using the brand Marcus.

Neyber was founded by Martin Ijaha and Ms Kalia, both former Goldman bankers.

Neyber’s other major shareholders include Wadhawan Global Capital, which is also a significant backer of Zopa, the peer-to-peer lender which is in the process of securing a full banking licence from the City regulator.

Last week, it was reported that Kapil Wadhawan, the investor’s chairman, had resigned from Zopa’s board after being arrested in India in connection with a money-laundering investigation.

Neyber has won a number of prominent awards for its approach to helping consumers tackle problem debts.

Neyber’s launch and acquisition of blue-chip clients have come during a period in which the treatment of persistently indebted customers by mainstream banks has come under intense regulatory scrutiny.

Payday lenders have also seen their fortunes rise and fall, with major providers such as Wonga and QuickQuid disappearing in the wake of a cap on charges.

The launch of salary-deducted consumer loan providers has formed one attempt to fill this gap.

Salary Finance, one of the leading players in the market, counts Legal & General among its investors.

Self-styled ethical providers like Neyber have, nevertheless, struggled financially.

Accounts filed at Companies House for the period to 31 March, 2018, show that Neyber Limited made a loss of nearly £16m, in addition to a loss of almost £7m the previous year.

Its auditor, Nexis Smith & Williamson, said its going concern opinion was dependent upon its ability to continue raising capital.

Salary Finance, Legal & General and Goldman Sachs all declined to comment.

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