NAB to bag neobank 86 400 for $220m

NAB to bag neobank 86 400 for $220m

National Australia Bank (ASX: NAB) will acquire the entirety of neobank 86 400 for $220 million and merge the startup with its digital offering UBank.

The transaction, subject to shareholder and regulatory approvals, will see 86 400's team become part of the NAB family.

NAB says the acquisition will accelerate the growth of UBank by combining its established customer base, brand and colleagues with 86 400's experience and technology platform.

Led by CEO Robert Bell, 86 400 has been operating as a mobile-led digital bank since it was granted an ADI licence in July 2019.

At 15 January 2021, 86 400 had more than 85,000 customers, $375 million of deposits, $270 million in approved residential mortgages and 2,500 accredited brokers.

"Bringing together UBank and 86 400 is consistent with NAB's long-term strategy and growth plans and will enable us to develop a leading digital bank that can attract and retain customers at scale and pace," NAB COO Les Matheson said.

"The combined business will deliver accelerated innovation and an enhanced customer experience to create a stronger and more competitive banking alternative for Australian customers."

NAB recently participated in 86 400's Series B capital raise and currently holds an approximate 18.3 per cent shareholding in the neobank. The price offered by NAB is a premium to 86 400's recent capital raise.

"From day one, our purpose has been to help Australians take control of their money. We've just rounded out an incredible year, delivered by our phenomenal team of only 120 people, and we're only just getting started," 86 400 CEO Robert Bell said.

"This will significantly fast-track our growth, propelling our business, customer numbers and balance sheet to a position which would've otherwise taken five years." 

86 400's independent directors have unanimously recommended that its shareholders vote in favour of the scheme, and each 86 400 director has confirmed their intention to vote any 86 400 shares which they own or control in favour of the scheme.

The sale of 86 400 comes just weeks after fellow neobank Xinja announced it intended to cease being a bank and would hand back its ADI licence to APRA.

Xinja completed the return of deposits process earlier this month, making it the first time an Australia ADI had undertaken the process.

Shares in NAB are down 0.3 per cent to $23.86 per share at 11.35am AEDT.

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