Two of the main investors in Wefox, the troubled insurance technology company, propose to lead a €25m (£21.1m) capital injection to thwart a rival bid from insurer Ardonagh to buy large parts of the company.
Sky News has learned that London-listed Chrysalis Investments and Target Global sent a term sheet to Wefox in recent days that they said would preserve value for their wider shareholder base.
The €25 million investment, which would also include funding from several other Wefox shareholders, would act as a bridge until the group is able to sell Assona, a subsidiary that provides insurance for electric bikes, according to sources.
The proposal comes in the midst of a fierce fight for the future of what was once one of Europe’s most important insurtech start-ups.
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Wefox has been devastated by losses in several of its key markets, including Italy, although its operations in the Netherlands remain profitable.
The proposal led by Chrysalis and Target aims to guide the company towards global profitability, which they believe is possible next year.
Mubadala, Abu Dhabi’s state fund, is in favor of selling an important part of Wefox to Ardonagh, in a €550 million deal that would preserve its returns but eliminate other shareholders and the company’s founders.
Sky News revealed last month that Mark Hartigan, the controversial British boss of Wefox, warned investors it could face collapse within months amid a series of regulatory and financial challenges.
Wefox was valued at $4.5 billion (£3.6 billion) in a funding round less than two years ago and counts Barclays and JP Morgan among its creditors.
Its assessment of financing options has made it the latest giant on the European tech scene to face an existential crisis.
Founded in 2015, Wefox sells insurance products through internal and external insurance brokers and has frequently boasted about its ambition to revolutionize the insurance industry through the use of technology.
It has more than 2 million customers in its business.
Hartigan took over the new executive role from Julian Teicke, one of the company’s co-founders, who said in a public announcement in March that his transition to become president would allow him to “dedicate more time and energy to my greatest passion: supporting founders in building their own enterprises.”
The new boss is also cutting jobs in core functions, having eliminated 60 roles in recent weeks, with more roles expected to follow.
In July 2022, Wefox raised a $400 million Series D funding round, valuing it at $4.5 billion, making it one of the largest fintechs in Europe.
This followed a $650 million round in May 2021 that valued it at $3 billion, reflecting investors’ buoyant appetite to back expansions seen as having the potential to become global competitors of genuine scale.
It then secured a further $55 million in equity financing and the same amount in debt financing from Barclays and JP Morgan a year ago.
Chrysalis declined to comment.
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