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Currently, N26 wants to ready an IPO by the end of 2022. However, the bank also has other plans if higher interest rates hampers its plans.
N26, a German neobank, recently indicated that it is preparing to launch an initial public offering (IPO) by the end of 2022. Co-chief executive officer Maximilian Tayenthal revealed the Berlin-based online banking platform’s intention in a recent media session.
During the Mobile World Congress technology conference on Monday, Tayenthal stated:
“By the end of the year, N26 will be structurally IPO-ready.”
N26 IPO Agenda Could Be Impacted by Impending Interest Rates Hike
N26’s plans to publicly list comes at a time when most traders and investors worry about the financial landscape of US markets. A crucial factor fueling this is the planned interest rate hike by the US Federal Reserve, and other major central banks. The reason for this impending fiscal move is to stifle the prospect of inflation. However, higher interest rates spell disaster for high-growth tech companies. This is because these companies traditionally rely on debt financing to drive rapid expansion.
Notwithstanding, Tayenthal maintains that N26 does not find the prospect of rate hikes daunting. This may be due in part to the fact that the platform is a licensed bank. Moreover, in 2020, N26 had close to 4.3 billion euros – or $4.8 billion on its balance sheet. As Tayenthal put it:
“We are one of the companies that actually have a hedge on rising interest rates, N26 is a liquidity-generating machine.”
This suggests that N26 would not need to generate funds through an IPO if interest rates were to shoot up. Instead, the neobank would take on a “self-sustaining” mode, Tayenthal added. The implied mode is a common practice among some banks during times of increased interest rates. This is when these banks resort to generating a higher yield on cash deposits.
However, N26 is still unprofitable. Back in 2020, the platform reported a net loss of 150.7 million, representing a drawdown of 30.5% from the preceding year.
Founded in 2013 by Tayenthal and his longtime friend Valentin Stalf, N26 has grown to become a $9 billion venture. The German banking startup recently generated $900 million in fresh funding to expand its operational scope beyond retail banking. Some of the new areas where N26 reportedly plays include digital currencies and stock trading. The neobank already has tech-focused investment manager Coatue and billionaire PayPal co-founder Peter Thiel as prime investors.
According to Tayenthal, N26 could debut its stock market service as early as 2024. However, the platform’s co-founder and co-CEO also stated that it is in no hurry to list.
“We are not stressed to enter the public markets anytime soon; the private markets have proven to be incredibly liquid,” said Tayenthal.
N26 currently offers fee-free checking accounts via an app. The fintech firm also competes with already-established lenders in the space, in addition to rival fintech platforms such as Revolut.
Russia’s recent declaration of war against Ukraine has also spooked the markets. This has forced several companies to reconsider recent plans to go public.