Thu, 23 May 2019 | ADMINISTRATION
After failing to secure further backing from the Royal Bank of Scotland (RBS), British fintech company Loot was forced to enter administration as a result of running out of funds.
Financial and professional advisory firm Smith & Williamson were called in to handle the administration process, with partner Henry Shinners appointed as one of the joint administrators.
Despite the administration, Shinners claimed that negotiations were already underway with potential buyers, and that a deal could be reached “within days” in order to prevent disruption to more than 200,000 Loot customers.
Established in 2014 by Ollie Purdue, the Loot app was designed to assist students and young people with budgeting, and help them save money by having no fees for international card transactions. While the company did not have a full banking licence and was not protected under the Financial Services Compensation Scheme (FSCS), it operated under an “e-money” licence which is regulated by the Financial Conduct Authority.
Just six months ago, the company received £5 million in investment from RBS in exchange for a 25 per cent stake in Loot with a potential deal to buy the company as a whole. However, after performing due diligence, the bank retracted its deal, leaving Loot with insufficient funds.
RBS’s investment was linked to its own standalone digital bank, Bó, which aimed to adapt to changing consumer habits and rival fintech firms like Revolut and Monzo. However, the bank’s outgoing chief executive, Ross McEwan, claimed that there was no guarantee that all of the bank’s new initiatives would be successful, but claimed that even the failed projects would be useful in building its core business.
Loot further attempted to secure investment by encouraging its customers to support the initiative via a round of crowdfunding, but the link on the Seedrs platforms has expired, indicating a failure.
The administration process is ongoing, with potential buyers invited to express their interests immediately.
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