Private equity firm Warburg Pincus is among the parties in talks to buy iwoca, the London small business lender that has written more than £6bn of loans since 2012, in an auction that could value the company at around £1bn.
iwoca was founded in 2012 by chief executive Christoph Rieche and James Dear to lend to small and medium-sized businesses. It now funds tens of thousands of British SMEs.
According to Sky News, an auction of the company has been under way for several weeks. Warburg Pincus, which has a long record of investing in banking and financial services, is one of the bidders exploring a deal.
The deal so far
Bankers at Qatalyst Partners are running the sale process. A valuation in the region of £1bn has been mentioned, though no offer has been confirmed and the terms of any bid were not disclosed.
Warburg Pincus declined to comment. Neither the number of other bidders nor the structure of a potential transaction has been made public, and it has not been disclosed how much of the equity a buyer would acquire.
The numbers behind the business
iwoca provided £1.5bn of loans to SMEs last year, more than 50% higher than in the previous year. Cumulative lending since launch now exceeds £6bn.
That growth means a buyer would be acquiring a loan book that is still expanding quickly. Rieche has said that the SME funding gap continues to widen even as iwoca lends at scale and adds new products and partnerships.
Who sits on the cap table
The company's backers include Augmentum Fintech, the London-listed fintech investor, and CommerzVentures, the venture arm of Germany's Commerzbank. A sale at around £1bn would give these investors a route to liquidity through a trade sale rather than a stock market listing.
The size of each investor's holding, and the price per share implied by a £1bn valuation, have not been disclosed.
What comes next
The auction is now several weeks old, so the next stage is the submission of firmer offers. The outcome will depend on whether bidders are prepared to pay close to the £1bn level indicated, and on how they price the credit risk in iwoca's loan book.
Neither iwoca nor Qatalyst has commented publicly on the timetable. Further details on bidders and terms are expected as the process moves towards final offers.
Original source: Sky News — https://news.sky.com/story/warburg-pincus-eyes-takeover-of-small-business-lender-iwoca-13611448
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