Jan 21 (Reuters) - Digital banking provider Chime Financial
Inc has asked Goldman Sachs Group Inc to help it with
preparations for an initial public offering in New York,
according to people familiar with the matter.
The financial technology startup will likely be valued at a
substantial premium to its valuation of $25 billion from an
August funding round https://www.reuters.com/technology/fintech-firm-chime-valued-25-bln-after-750-mln-funding-2021-08-13
led by Sequoia Capital, the sources said, adding Chime could
aim for a valuation of nearly $40 billion.
Having been valued at $1.5 billion only three years ago, its
blockbuster listing would underscore how Chime has managed to
take market share from traditional banks thanks to checking
accounts that offer payday advances and no overdraft fees.
Chime interviewed investment banks in recent weeks before
deciding to give Goldman Sachs a leading role in its listing,
the sources said. Other banks will be added to the roster of
underwriters in the run-up to its IPO, which could come as early
as this spring, the sources added.
The sources, who requested anonymity, cautioned that the
timing and size of the offering are subject to market
Chime and Goldman Sachs declined to comment.
Launched by former Visa Inc executive Chris Britt and
Comcast Corp alumnus Ryan King in 2012, Chime offers
its services through partnerships with brick-and-mortar banks,
including branded checking accounts with user-friendly features
such free overdrafts.
It makes money by earning a fee from payment processors such
as Visa every time a customer uses a Chime debit or credit card.
If Chime decides to move ahead with its go-public plans, the
company may have to brave choppy market conditions, which have
caused some IPOs to be pulled in recent weeks and weighed on
listings that took place last year.
Robinhood Markets Inc, another popular financial
technology startup, has shed more than half its market value
since its IPO in July, while shares of Brazilian digital bank Nu
Holdings Ltd are down around 15% following its listing in
Chime enjoyed robust growth during the pandemic as consumers
embraced digital banking services, while the company offered
popular products including fee-free overdrafts and faster access
to stimulus checks.
The company does not disclose user numbers, but research
firm eMarketer estimated in June of last year that Chime would
have 13.1 million U.S. account holders by the end of 2021,
leading the U.S. digital bank market.
Chime competes with other digital banking services such as
Revolut, Current and Varo.
(Reporting by Krystal Hu and David French in New York and
Anirban Sen in Bengaluru
Editing by Matthew Lewis)