House of Fraser owner Sanpower pulls investment in digital challenger bank Tandem
Sanpower, the Chinese conglomerate which owns House of Fraser, has been forced to pull back on a multimillion pound investment in digital challenger bank Tandem, Morning Wire can reveal.
A £29m tranche of cash due to bolster the startup's capital requirements for launching as a full bank has been halted over concerns that Chinese authorities are restricting outbound investment.
Founder and incoming chief executive Ricky Knox told Morning Wire the startup will continue with its plans for launching the Tandem app with other features, but expressed disappointment that hopes of launching as a full bank had been dashed.
The app will launch without a planned savings product which requires the capital to hold deposits. But, Knox said, there would be no other impact on what customers are getting from the app. Any early users testing the savings product will have their deposits returned.
The bank will now miss a deadline for fulfilling some of the requirements of its banking license, authorised by the Prudential Regulation Authority, but Knox said the startup will reapply in due course and expects the process to be expedited when it does. Tandem's activities will still be regulated under the Financial Conduct Authority at launch.
The startup will fall back on existing investors for some of the cash but is open to looking for new investors to make up the shortfall from the nixed deal. It's understood a fresh deal with Sanpower in future has not been ruled out and a partnership with House of Fraser that will offer Tandem services to shoppers will continue.
House of Fraser remains a minority shareholder after putting £6m into the startup at the end of last year.
Funding for the startup stands at £39m to date from top names such as Omidyar Network, eBay founder Pierre Omidyar's venture capital firm, and Route 66 Ventures. It also raised £1m via crowdfunding.
Tandem, which recently announced the retirement of its chief executive Peter Herbert, is expected to launch in the coming months and will close to co-founders on 12 May in preparation. Co-founders, which now number around 10,000, are early users who are part of beta testing and contribute to its development. They will also get early access to the app, as well as new features and products.
It's understood news of Sanpower's pull back came late on Thursday evening with an investor meeting taking place late on Sunday and staff told this morning that the startup is now examining the structure of the business.