Get your free copy of Editor’s Digest
FT editor Roula Khalaf picks her favourite stories in this weekly newsletter.
Abu Dhabi’s Mubadala is locked in a bitter boardroom battle over the future of WeFox, a once-booming European insurer startup, as the country’s $300 billion sovereign wealth fund tries to salvage failed investments.
Mubadala is now circulating documents to other investors outlining potential options for the Berlin-based company, including a deal with a rival that would value some of its core assets at 550 million euros.WeFox was valued at $4.5 billion just two years ago.
Founded in 2015, Wefox has rapidly expanded its platform, which connects insurers with customers through a network of agents, to become one of the most highly valued European startups of the past decade.
In 2022, the company consolidated its position with a new investment round led by Mubadala, valuing the group at $4.5 billion.
The company has also raised funding from UK-listed investor Chrysalis and Liechtenstein’s Prince Max von und Zu’s LGT Group, among others.
But in the years since Mubadala’s latest investment, WeFox has faced challenges, mirroring a wave of startups that grew on cheap capital but now must contend with tight financial conditions and pressure to turn a profit.
The company is burning through cash and facing tough fundraising needs for its insurance division, while rival “insurtech” groups have seen their valuations plummet on the stock market.
The situation reached a crisis point this year when WeFox founder Julian Teike stepped down as chief executive in March and was replaced by the group’s chairman, industry veteran Mark Hartigan.
Against this backdrop, WeFox is in talks to sell a major part of the company to Ardna, a British insurance group backed by the Abu Dhabi Investment Authority, people familiar with the matter said.
The price for Ardna’s proposed all-stock deal for some of WeFox’s non-tech assets is about 350 million euros upfront, plus an earn-out payment of 200 million euros contingent on hitting certain milestones, according to people familiar with the matter.
Mubadala stands to gain more from the WeFox sale than other shareholders due to special clauses in the investment.
The wealthy fund negotiated what is known as a 2x liquidity preference, meaning that in the event of a sale, it would be entitled to receive twice the amount of its investment before other shareholders would be eligible to receive any proceeds from the sale.
Mubadala was reported by Bloomberg on Thursday to be open to a sale, but one of the people cautioned that it is just one of the company’s investors and is not leading any sale process.
Some WeFox investors who oppose the sale are putting together their own rescue financing deals that they believe could chart a path to profitability for the company and make it more valuable than Ardna’s proposal.
“Plans have been put in place to simplify Wefox’s business model and position the company to be profitable,” Chrysalis said in a statement in May, adding that it had contributed €3 million of the €20 million in new funding it had raised in recent weeks.
WeFox, Mubadala and Ardna declined to comment.
Additional reporting by Ian Smith
