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Neobank Deal Week: Qonto Confirms Buying Penta — Kontist Is Selling As Well At Discounted Price

We published our blog post on July 15th that Qonto is rumored to be interested in buying Penta. Just 7 days later Penta and Qonto confirmed the deal. Price estimates in the press are at “hundreds of millions”, where it may be fair to assume that the price will be below Penta’s target valuation of 500 m € at the start of their fundraising stated in February 2022, due to the current market conditions.

Kontist announced its sale within a week of the Penta deal, where Kontist is estimated to have been sold for around 10 m €, having raised more than 50 m US$ in debt and equity before.

Driving Forces

There are many driving forces at work here, who made the deal possible. One of them is the start of consolidations in the neobank market in Europe. The other one is the increasingly challenging business environment (think Ukraine, inflation, interest rates, supply chains,…) for the clients of Penta and Qonto, and so also for their business.

Following these challenges, there is an increasingly challenging fundraising environment. Especially the last point may play a major role here. Qonto had — maybe — the best possible timing with the announcement of their massive fundraising just before the private funding markets started to dry up in January 2022 (we covered it in our January News). Penta on the other hand was caught on the wrong foot with their timing.

Qonto drives market consolidation

Qonto is a well-funded unicorn, that started the cross-border consolidation in Europe in B2B neobanks and can be expected to be a driving force if the integration goes well. Consolidation in the European market is a step, that is necessary to get scale, grow fast, and get a critical mass for an eventual IPO. Qonto also has a great focus on customers, massively simplifying banking between different European countries. You can learn more about the in our interview with the Head of Germany at Qonto.

Penta is rumored to be not selling totally voluntarily, according to press reports in Germany. Penta was looking for money, after being bought by Finleap. They had to do this in an increasingly challenging fundraising environment, with an ambitious 500 m € valuation target.

Qonto takes a customer-centric approach

Qonto is also different, in that they coded their own core banking tool, which by itself was surely a massive project, that is surely still ongoing. This massive investment could also give them a massive advantage, being just a bit better than competitors, running on standard software (a tradeoff as old as modern banking). This holds true until it becomes dated. This happened to many other banks.

On the other hand, this also fits quite well with Penta, which has a pretty similar approach.

Looking ahead

So, the work for Penta and Qonto just starts, but what can we expect from this deal? As far as we know the following:

  • The Penta brand will disappear over time
  • Penta will migrate all of its data into the core banking system of Qonto
  • Penta will likely move away from Solarisbank, with most or even all of their services
  • Qonto will align the teams and processes of Penta to the best of their ability with Qonto’s standards

Depending on how ambitious Qonto’s plans are, the integration of Penta, — migration from Penta’s and Solarisbank’s systems to Qonto and reorganization of Penta’s processes — will be a sizeable project. On the other hand, Qonto would not have made such a deal, without having a plan on how to do this and how much to spend on it.

Kontist is Selling At Slahed Valuation

Berlin-based neobank Kontist — focused on freelancers — also announced yesterday that they are sold to Denmark-based Ageras. Ageras offers finance and accounting software. Coincidentally Kontist also offers finance and accounting services to their 50.000 customers. The article wrote about a “double digit” million price (Source).

We already mentioned above that Penat likely did not get its target valuation at half a billion euros. Now another blog hinted, that the price for Kontist has been slashed by around 75% compared to their last VC funding (Source).

Some background on the correction of the valuation. Kontist is almost exclusively active in Germany, but their parent company Kontist ApS is headquartered in Kopenhagen. The annual report of the parent company states for the end of 2021 that their German unit (Kontist GmbH) has been written down from a former valuation of 31,5 m Euros to only 8 m Euros (approx -75%).

Before the actual sale of the company, both founders bought out 90% of the equity stake in the German entity in June, from their former investors. Those investors included Lego CEO and billionaire Kjeld Kirk Kristiansen, as well as fellow billionaire Anders Povlsen, via their Company Builder Founders. Both funded the company for years and owned a majority stake before the management buyout.

Both values are actually surprising since Crunchbase shows 43,7 m US$ in equity investments (from pre-seed to series b) and two rounds of 9,5 m US$ in debt investments (both in 2021).

The actual sales price of Kontist is estimated to be around 10 m Euros. Both founders spoke to interested parties and this apparently drove the price up.

This is another sad end for a former award winner of the Fintech Germany Awards. Kontist was awarded the 2020 special award as a Covid-19 hero (Link to PM).

Importance of the deals (Consolidation)

The European market will surely pay attention to all news and rumors about the integration. Downturns are usually seeing more M&A activity, so these transactions could be just the start of well-funded neobanks taking over smaller rivals and other companies.

There is a lot of news alters created right now in consultancies and banks to track the Penta deal and its post-merger integration.

Updated on July 29th: Extension on Kontist and their slashed the valuation



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