Jupiter to sell Starling Bank stake at 40% discount

By Daniel Lanyon on Friday 23 September 2022

Digital Banking

Fund liquidity concerns, unrelated to the neobank, appear to be prompting Jupiter’s sale of Starling Bank.

Jupiter to sell Starling Bank stake at 40% discount
Image source: Starling Bank

One of the most prominent investors in Starling Bank, Jupiter Asset Management, is close to a deal to sell its stake in the business. 

Jupiter holds 7 per cent of Starling’s equity and is, according to Sky News, set to agree to a price of c.£100m in a deal set to close in a matter of weeks. 

The sale price represents a valuation cut of 40 per cent on Starling’s last funding round in March of 2022 when it raised £130m from investors at a valuation of £2.5bn.

Despite this summer reporting its first full year profit in its latest annual report, which covered the period to the end of March 2022, investors are discounting Starling’s valuation either owing to a changing macroeconomic outlook or owing to Jupiter’s desire for a quick sale.

Jupiter is selling the stake in an apparent bid to avoid further scrutiny of the Jupiter UK Mid Cap fund, the portfolio it holds part of its stake in Starling in. 

Jupiter UK Mid Cap fund is an open-ended fund, meaning investors can ask for their money back at any time. While this is not usually an issue, as the fund investors in publicly traded equities, it also can hold up to 10 per cent of its total value in illiquid assets such as private stakes in venture-backed companies such as Starling. 

The asset manager also has exposure to Starling via another fund it manages, the closed-ended investment trust Chrysalis, although as reported, the sale will not include this tranch of shares.

Goldman Sachs, which is already an investor in the neobank having led its £50m round in 2021 at a £1.1bn valuation, is reportedly part of the talks as it looks to increase its stake in the business founded by Anne Boden (pictured) in 2015. The investment bank also took part of the last funding round.

A spokesperson for Starling declined to comment.

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