Lloyds agrees to acquire digital wallet provider Curve for $139M despite investor backlash

Lloyds Banking Group has agreed to acquire British digital asset wallet service provider Curve in a deal worth £120 million ($139 million), according to people briefed on the transaction speaking to Sky News. 

According to the latest report from Sky News on the matter, the agreement is set to be announced formally next week. Curve told its shareholders in recent days that it had signed a share sale and purchase contract with Lloyds, which could see the UK’s largest high street bank make its most significant step into digital payments yet.

Yet, according to insiders’ understanding, the purchase has sparked a dispute among some of Curve’s top shareholders, who believe the valuation is significantly below what the platform is truly worth.

Curve acquisition by UK bank not in the clear yet

According to anonymous sources, the company, boasting over six million users, could exhaust its cash reserves this year if a buyer is not secured. 

In early September, Chief Executive Shachar Bialick admitted that Lloyds Banking Group offered a valuation that was low compared to its previous fundraising rounds, but insisted that Curve needs to secure its future regardless of the sale.

Curve has raised more than £250 million ($289 million) since its launch, including a £37 million ($42.8 million) funding round that took place in March this year, led by Hanco Ventures. 

We see issuers looking to enter the market, and networks introducing innovative products such as Visa Flex and MasterCard One Credentials. This investment would allow us to invest further in our customer experience, bring new partnerships, and accelerate our path to profitability.

Shachar Bialick.

The current deal values the business at a fraction of those investments, a gap that has been blasted by Curve’s shareholders, now seeking legal means to stop its sale.

IDC Ventures threatens Curve and Lloyds Banking Group

Sky News reported that Curve’s early shareholders, including IDC Ventures, the company’s largest external investor with a 12% holding, have publicly rejected the deal and are threatening legal action.

IDC Ventures issued a statement saying it is deeply worried about how Curve’s management and board handled the sale talks. A company spokesperson told Sky that governance issues and ownership questions were unresolved at the time of the agreement, and argued that the transaction was not in the company’s best interests. 

It is a matter of real surprise to shareholders that Lloyds Banking Group would contemplate proceeding with a transaction that IDC believes is not in the best interests of the company or its shareholders. IDC does not intend to support the proposed sale and does not believe that it is capable of being implemented without its support.

IDC

Curve, in its message to shareholders, acknowledged the disappointment around the valuation, adding that the offer failed to meet the expectations set beforehand. 

We recognise that the value of this transaction falls short of the ambitions we all held for Curve, and we share the disappointment some of you may have in this outcome. Yet, the board strongly believes this transaction represents the best available path forward for Curve’s creditors and shareholders as a whole.

Curve.

IDC Ventures said last Friday it would defend its commercial interests and asked both Curve and Lloyds to address its concerns before moving ahead with the acquisition. 

Curve wallet is facing internal leadership and governance issues

In July, IDC Ventures attempted to remove Lord Stanley Fink, the former Conservative Party treasurer and a high-profile City figure, from his position as chair of Curve. The fund propounded that the appointing shareholder had already removed him, only for the board to reinstall him two days later. 

During Curve’s extraordinary general meeting (EGM) in early October, opponents failed to remove both Fink and chief executive Bialick through a shareholder vote.

IDC Ventures, represented by the London-based law firm Quinn Emanuel, has been involved with Curve for six years and has participated in several major funding rounds. In a statement shared with Sky News last month, the investor said it was troubled by the reappointment of Fink and by the lack of transparency around the board’s handling of the sale process.

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