Allianz puts N26 shares up for sale – with a strong devaluation

The Allianz Group wants to get rid of its stake in the Berlin neobank N26. As the Financial Times reports that the insurer is looking for buyers for its shares, which are said to be around five percent. He is aiming for revenue of more than 150 million US dollars (137 million euros).

At this sale price, N26 would be valued at around three billion US dollars – well below what was the basis for the last financing round in October 2021. The neobank had recently collected around 900 million dollars and was valued at around nine billion dollars at the time.

A lot has happened since then. The financial supervisory authority Bafin has capped N26’s new customer business, partly because of poor risk management. Since November 2021, the bank has been allowed to take on a maximum of 50,000 new customers per month in Europe. At the same time, the neobank supervisors sent a second special representative to oversee the elimination of the deficiencies.

Growth is limited because of this tight corset. Recently, however, N26 has entered crypto trading, for example, and managed to increase sales by around 30 percent in 2022. However, the neobank is still in the red, even though gross income has recently increased by 50 percent to 182 million euros.

However, there was also harsh criticism of the management style of the co-founders and bosses Valentin Stalf and Maximilian Tayenthal – from their own top management. In a branded email to the two founders in February 2022, they denounced “a culture of fear and blame” at N26. Six former members of the “Extended Leadership Team” (ELT) reported on the “disturbed” relationship between the founders and the rest of the management team. “We are concerned that these issues, if left unresolved, will send the company into a downward spiral,” the executives wrote. There is a culture of fear, too much micromanagement and frustration. “This prevents N26 from getting to the next stage of development” and is therefore prepared for an IPO.

N26 said it had made significant investments in governance and leadership. In an interview with the blog FinanceFWD Stalf pointed out that the internal feedback email is more than a year old. “We want to live a very open culture at N26, and I believe that we have it,” said Stalf. He takes criticism very seriously.

Today, however, half of the six signatories from back then no longer work for N26. Risk director Thomas Grosse resigned in spring 2023, successor Jan Stechele recently took over as interim manager. The former HR manager Eva Glanzer and CFO Jan Kemper have already left the digital bank, and marketing manager Alexander Weber is said to be about to leave. Arnd Schwierholz, previously CFO at Flixbus, came on board as the new CFO for Kemper in February.

Allianz has held shares in N26 since 2018 through its Allianz X investment company. According to calculations by the FT, if the shares were successfully sold, they would exit the holding with a significant book profit.

Allianz X is said to give the growth restrictions of the supervisory authority as the reason for the significantly lower rating of N26. The manager magazine also reports on quarrels between other important financiers and co-CEO Stalf. In the mega-financing round in autumn 2021, when the problems with supervision were already known, investors had a safeguard written in the small print should the Bafin conditions still apply this year. Now both sides are allegedly arguing about whether this clause applies and whether the founders have to give the lenders more shares.

Allianz did not want to comment on any intention to sell the FT. N26 has said they are currently unaware of any sale process and have not commented on speculation about the valuation issues from investors.

The neobank shouldn’t be surprised that the insurance group is dissatisfied with its N26 stake. Last year, Allianz X boss Nazim Cetin said in an interview with the Handelsblatt that the “growing pains” were “not good” – but was still convinced at the time that management would get the problems under control again. If Allianz exits, it will be even more difficult for the N26 founders to attract new investors.