Why is Monzo considering anything but a London listing?

Monzo, one of the United Kingdom’s most successful fintech companies, is reportedly in talks with Nubank for an £8bn–£10bn buyout as an alternative to a round of funding as they look to expand further into Europe. This is a company that may seem like a prime candidate for an IPO: it has seen revenue rise by 40 per cent year over year in addition to a third consecutive year of profitability. Yet, they are teetering further away from a listing on the London Stock Exchange and are choosing to take on private capital instead. Although the FTSE is up roughly 10 per cent this year, the LSE has been losing ground as an exit venue for companies for multiple years. According to Morningstar Pitchbook, London fell out of the top 20 global IPO venues in September 2025, and domestic listing of UK companies has fallen to 46 per cent as of 2025, down 35 per cent since 2019. The latest reports about Monzo are just the newest reflection of the structural issues existing in UK markets.

For a bank to grow, one of the most important things regulators look at is the capital held against its balance sheet. This capital acts as a safety net for when the loans a bank makes to generate its profits go bad. The core profit driver of a traditional bank is the net interest margin: banks pay depositors at one interest rate and lend to borrowers at a higher one, pocketing the difference. To avoid putting depositors at risk, regulators require a bank to hold a minimum amount of its own capital for every pound it puts at risk through lending. More specifically, in Monzo’s case, it lends out only about 10p of every £1 deposited. This is in comparison to roughly 95p at Lloyds while at Nubank, lending alone generates 41% of gross profit. Closing the gap means lending out far more of its deposit base, meaning they need more money to back the lending. To bring in that money, there are typically three main routes: a private funding round, a sale, or an IPO. The choice often comes down to which route values the company highest while aligning with the board’s other priorities, such as independence, certainty and liquidity.

Of the factors mentioned, the LSE may be the least desirable. Goldman Sachs found that not only does the UK trade at an extreme discount to the US but that this is also true for every single listed sector. Additionally, UK pension funds have also reduced their allocation to UK equities from 53% to just 6%. This discount and falloff in demand may deter Monzo from listing in the LSE as they may not be able to raise the amount of capital needed. Additionally, Nubank presents a unique synergy with Monzo. After an acquisition, Nubank’s comparatively larger balance sheet can aid in Monzo growing its lending business while Nubank can break into the European market through Monzo’s UK and European banking license.

Beyond Wise and Flutter’s recent moves to delist or move their primary listings away from the LSE, Monzo showcases two more angles to look at the decline. Firstly, this was a company that many thought to be a guaranteed win: home-grown, profitable, openly preparing for an IPO, and championed by the city. So, if the LSE ends up losing out on Monzo, what does that spell for the future listings that are harder to win? Additionally, the IPO drought is being compounded by a mergers and acquisitions (M&A) wave. “At the current rate of M&A, there will be no UK stock market left in 10 years” says Clive Beagles, fund manager of the JOHCM UK Equity Income Fund. This highlights a recent trend where private companies are increasingly choosing to rely on private capital or a sale as the exit for founders and investors. PitchBook reports that the number of European venture-backed companies with a high probability of listing has fallen by more than 40% since the start of 2025, even as IPO markets recover globally. Additionally, soaring venture debt has led to much higher valuations that limit the IPO window of private companies. Therefore, over 85% of recent venture-backed exits have been through M&As rather than listing, according to J.P. Morgan.

The deserting of domestic equities by pension funds and insurance coupled with the growth of private market funding presents a loop that will continue to pressure the LSE. Although the FTSE is up 10% this year, if the LSE is unable to revitalise demand from investors, it will continue to lose out to its peers for listings.