Monzo IPO: what to know and how to buy shares

When could the Monzo IPO take place?

It appears that Monzo’s initial public offering (IPO) may still be some time away. In May 2024, CEO TS Anil noted that while Monzo will make a "great public company one day," it was not there yet. In June 2024, the CEO then told City AM that he wished to grow the business "several times" larger first.

He noted, "It’s too early for us to talk about the IPO. We’re incredibly well capitalised. We don’t need to raise capital. We’re focused really on continuing to scale the business".

Of course, much of this hoped-for growth will come from the US, which has been notoriously difficult for challenger banks to penetrate — meaning the IPO could come sooner than expected, especially if Monzo decides it needs the capital to crack the States.

How to buy Monzo shares if the company lists

If Monzo do end up listing in the UK, you can buy their shares from £3.00 commission with us. That's the rate if you've traded 3+ times in the previous calendar month, otherwise our standard fee is £8.00.

If Monzo lists in the US, you can buy their shares from £0.00 commission with us. That's the rate if you've traded 3+ times in the previous calendar month, otherwise our standard fee is £10.00.

You'll be able to invest in Monzo right away on the day of the listing.

1. Do your research on IPOs
2. Open a share dealing account
3. Search for Monzo on our share dealing platform
4. Choose the number of shares or amount of money you wish to invest
5. Place your deal

When dealing shares, you own the stock and become a shareholder in the company. You'll profit if the share price rises above the point at which you bought, or potentially from any dividends paid. You could get back less than you put in.

You can also trade the Monzo IPO using leverage through a variety of products with us. This means you could gain or lose money quickly and could end up losing more than your initial deposit. This is higher risk and requires thorough risk management.

Read more about IPOs:

• Upcoming IPOs to watch
• How to trade or invest in IPOs
• Trading IPOs on our platform

What will Monzo be valued at and what will the share price be?

Monzo is currently preparing a secondary share sale that would value the digital challenger back at some $5.9 billion, up from $5.2 billion in May 2024. This secondary share sale is designed to allow UK employees to sell shares before the presumed increase in Capital Gains Tax in the October budget.

Monzo investors StepStone Group and Singapore’s sovereign wealth fund GIC are expected to buy the shares at this valuation.

Monzo also raised $610 million earlier this year in capital raisings which included Alphabet's (Google) CapitalG fund, Hedosophia — a backer of top European fintechs — and HongShan Capital. Other backers include Passion Capital, Tencent, Coatue, Accel and the Abu Dhabi Growth Fund.

This latest share sale continues to fuel speculation over a potential IPO despite the CEO’s public reticence. While the challenger bank is UK-based, plans to expand into the US could also see the company list in the US instead, given the higher valuations and deeper liquidity to be found across the Atlantic.

For context, Atomico considers that the average European tech firm enjoys a $1.6 billion valuation when it lists domestically — this rises dramatically to $5.7 billion when listed in the US. Conversely, Monzo is part of the Unicorn Council, created by the UK’s Innovate Finance trade body that is focused on making the UK an attractive listing location.

Monzo shares would likely be priced to compete with Lloyds Bank, somewhere in the 50p-60p range; however, they could be higher at launch if Monzo prefers to emphasise its tech credentials over the financial aspect.

What is Monzo’s business model?

Monzo is a UK-based digital challenger bank, founded in 2015 by ex-Starling Bank employees Tom Blomfield, Jonas Huckstein, Jason Bates, Paul Rippon, and Gary Dolman.

Despite its youth, Monzo has enjoyed significant growth and expects to reach 11 million customers by the end of 2024. It’s already the seventh largest bank in the UK, though has no physical branches, meaning customers can only bank through its app, or website.

In common with traditional banks, Monzo generates income from typical sources including interest, loans, interchange fees and overdrafts, alongside select investment offerings.

Competitors include Starling and Revolut — with the latter recently receiving a UK banking licence. The digital bank saw its first annual profit before tax in the financial year to March 2024, of some £15.4 million — up from a loss of £116.3 million the year before.

Revenue more than doubled year-over-year (YoY) via the introduction of more savings and lending products, rising to £880 million — though as a result, provision for potential defaults nearly doubled to £204 million. Meanwhile, card spend grew by 42% YoY, with deposits up 88% to £11.2 billion.

On 31 March 2024, Monzo had more than 9.3 million personal customers and more than 400,000 business customers — with the business customer count doubling in a single year. In fact, company data suggests one in seven new businesses now apply for a Monzo account.

Recently, the bank advised it would be launching pension products over the next 12 months, putting it in direct competition with traditional rivals. And Monzo also plans to launch a mortgage product, to let customers apply for a mortgage directly in-app, though the CEO has previously noted this would be in partnership with another lender.

Monzo also plans significant expansion plans into the US, having hired Conor Walsh from Block's Cash App as its new US CEO. Anil has advised the focus remains on product to ensure Monzo can compete with titans including Citi and JP Morgan. The challenger bank is also expanding into Europe and plans to open a Dublin office as a first step.

Why are there Monzo ethical concerns?

Monzo suffered from significant regulatory issues in 2021 when the Financial Conduct Authority launched an inquiry into the bank's activities for potential criminal breaches of anti-money laundering and financial crime regulations dating back to October 2018.

This opened up the possibility of criminal prosecutions against the bank — though Monzo has recently reported it had been informed by the Financial Conduct Authority (FCA) that it was no longer assessing criminal liability, although an investigation is ongoing, and there remains a chance of financial impact.

The bank has also reshaped its corporate structure, including establishing Monzo Bank Holding Group, both to avoid any punitive capital treatment by British regulators, but also potentially as a first step towards an IPO.

More widely, Monzo as a digital bank may also be partially responsible for the decision of competitors to close physical branches, affecting individuals who struggle to bank digitally.

Monzo-related investments

While you wait for the Monzo IPO, there are several alternative investing choices. Banks already listed, and on the FTSE 100, include HSBC, Lloyds, Barclays and NatWest.

While Starling and Revolut would perhaps be the closest analogues, neither are yet publicly listed (and like Monzo, their potential IPOs are hotly anticipated).

For investors seeking some diversification but within the Fintech sector, popular choices include the Xtrackers MSCI Fintech Innovation UCITS ETF, which includes Visa, PayPal and Mastercard among its top holdings with a reasonable 0.30% expense ratio. The Invesco KBW Nasdaq Fintech UCITS ETF is another common choice, but sports a higher 0.49% expense ratio. It holds MSCI, Interactive Brokers and Coinbase in its top holdings.

Monzo IPO summed up

• The Monzo IPO is expected to launch within the next couple of years
• Monzo is currently valued at $5.9 billion, which indicates a potential launch valuation
• The digital challenger bank is targeting 11 million customers by the end of 2024
• Revenue more than doubled YoY to £880 million in FY24
• Monzo also has significant expansion plans in the US and Europe even as its UK footprint grows