Fintech BaaS Favorite Railsr May Be at the End of the Track as Insolvency Looms
Railsr, a London-based provider of banking-as-a-service, has been the subject of financial insolvency rumors for some time.
According to insiders, Britain’s financial regulators are now on red alert concerning the company, and growing reports indicate that the company may soon end its operations in the face of dire economic situations.
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Railsr on Bankruptcy Watch
Earlier this week, Sky News reported that the Financial Conduct Authority (FCA) is currently monitoring the health of Railsr – one of the foremost fintech companies in the United Kingdom, as its financial health has continued to deteriorate.
Citing sources familiar with the company, the news source explained that the London-based payments service provider, which used to be known as RailsBank, is now looking toward a sale through a solvent transaction. However, if talks break down, the company could enter possible administration.
Railsr has been a shining fintech company in London for years now. The company counted several notable agencies as clients and was considered a possible unicorn.
However, its financials have lagged, with the broader economy and the slowdown in the global tech sector affecting it significantly.
Who Gets to Buy?
In 2022, the company raised a Series C round of $26 million in equity and $20 million in debt, resulting in a steeply discounted valuation of $250 million.
The funding was intended to serve as a bridge round to help Railsr get over the line in preparation for an eventual sale. And since then, rumors of a sale have followed the company around.
Last November, the company was said to be discussing several strategic options for a possible sale. Per reports at the time, Railsr had reached out to FT Partners – a capital market company and investment bank focusing on the financial technology sector – to help explore its options.
Earlier this year, Sky News had also reported that Railsr was in talks with African payments giant Flutterwave over a possible acquisition.
As the news source pointed out, Flutterwave had been vying with a consortium of existing Railsr investors and shareholders for the right to buy the company outright.
Flutterwave, a $3 billion unicorn company, was looking to use Railsr as a launchpad into the UK fintech space to expand its operations beyond the African frontier.
However, it appears that talks between both parties broke down between January and now. Per the recent Sky News report, Railsr is now looking towards selling some of its operations to third parties.
A source close to the process believes this issue could be resolved as early as next week, although no official communication from Railsr has been seen.
The news of Railsr’s possible sale is the latest in a wave of consolidation efforts in the tech space.
Interestingly, the London-based company itself isn’t a stranger to this, as in 2020, Railsr acquired Wirecard Card Solutions – the UK arm of disgraced German fintech company Wirecard.
The acquisition was a major step for Railsr, with Wirecard Card Solutions enjoying strong links into the wider European fintech landscape. Its services included customized card products as well as prepaid, credit, and debit cards.
Unfortunately, it appears that even that acquisition was insufficient to save Railsr.
Over the past year, the tech landscape has seen a significant slowdown, with venture capital funding declining amid rising inflation fears and economic hardships.
Even after laying off an unspecified percentage of its workforce, this appears to be the end of the road for Railsr.
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