City watchdog on alert for failure in fintech Railsr | Business news

The Financial Conduct Authority is monitoring the financial health of Railsr, the bank-as-a-service provider, amid emergency sale talks, Sky News learns.

The City regulator is on alert for an emergency restructuring of Railsr, one of the UK’s most prominent fintechs.

Sky News has learned that the Financial Conduct Authority (FCA) is monitoring the situation at Railsr – a banking-as-a-service provider formerly known as Railsbank – which was among the companies that picked up assets from collapsed German group Wirecard.

City sources said Railsr was moving ahead with plans to sell its regulated business to third parties following the conclusion of takeover talks with Flutterwave, the African payments technology business.

Restructuring experts at Alvarez & Marsal oversee the sale process.

It was still possible that the entire business would be sold through a solvent transaction, although an administration of Railsr’s parent company has also been one of the options being considered in recent days, according to insiders.

A spokesperson for the FCA said it “does not comment on individual firms”.

A person close to the process said Railsr’s board, led by respected businessman Rick Haythornthwaite, expected an outcome from the sale process as soon as this week.

He started the business only in the last two months.

A consortium of several existing Railsr investors had also competed to buy the company, which specializes in so-called embedded financial solutions such as banking, credit cards and digital wallets.

Railsr’s efforts have deepened amid expectations of consolidation in the fintech sector as companies struggle to access sufficient standalone funding to survive.

Railsr itself raised a bridge financing round late last year that was designed to provide enough capital to execute a sale.

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Last fall, the company announced the completion of a $46 million Series C funding round, although it did not disclose that this took place at a valuation of about $250 million — well below a previous fundraising.

Railsr has been on the acquisition trail itself, having snapped up assets from the collapsed German company Wirecard following the revelation of a massive fraud there.

It has raised well over $100 million in equity funding, backed by investors including Visa.

The British company secured a coup last year when it appointed Mr Haythornthwaite, former chairman of MasterCard and current chairman of Ocado and AA, as chairman.

Nigel Verdon, Railsr’s co-founder, previously claimed that the company is “transforming the financial industry in the same way that Apple did to the music industry when they created iTunes.”

Railsr declined to comment.