By Krystal Hu, Anirban Sen and David French
(Reuters) - Digital banking provider Chime Financial Inc has asked Goldman Sachs Group Inc to help it with preparations for an initial public offering in New York, according to people familiar with the matter.
The financial technology startup will likely be valued at a substantial premium to its valuation of $25 billion from an August funding round https://www.reuters.com/technology/fintech-firm-chime-valued-25-bln-after-750-mln-funding-2021-08-13 led by Sequoia Capital, the sources said, adding Chime could aim for a valuation of nearly $40 billion.
A spokesperson for Chime denied that Goldman Sachs was advising the company. Goldman Sachs declined to comment.
In a statement earlier on Friday, the spokesperson said: "While Chime intends to be a publicly listed company some day, we have not made any decisions on underwriters and have no immediate plans for an IPO."
Having been valued at $1.5 billion only three years ago, its blockbuster listing would underscore how Chime has managed to take market share from traditional banks thanks to checking accounts that offer payday advances and no overdraft fees.
Chime interviewed investment banks in recent weeks before deciding to give Goldman Sachs a leading role in its listing, the sources said. Other banks will be added to the roster of underwriters in the run-up to its IPO, which could come as early as this spring, the sources added.
The sources, who requested anonymity, cautioned that the timing and size of the offering are subject to market conditions.
Launched by former Visa Inc executive Chris Britt and Comcast Corp alumnus Ryan King in 2012, Chime offers its services through partnerships with brick-and-mortar banks, including branded checking accounts with user-friendly features such free overdrafts.
It makes money by earning a fee from payment processors such as Visa every time a customer uses a Chime debit or credit card.
If Chime decides to move ahead with its go-public plans, the company may have to brave choppy market conditions, which have caused some IPOs to be pulled in recent weeks and weighed on listings that took place last year.
Robinhood Markets Inc, another popular financial technology startup, has shed more than half its market value since its IPO in July, while shares of Brazilian digital bank Nu Holdings Ltd are down around 15% following its listing in December.
Chime enjoyed robust growth during the pandemic as consumers embraced digital banking services, while the company offered popular products including fee-free overdrafts and faster access to stimulus checks.
The company does not disclose user numbers, but research firm eMarketer estimated in June of last year that Chime would have 13.1 million U.S. account holders by the end of 2021, leading the U.S. digital bank market.
Chime competes with other digital banking services such as Revolut, Current and Varo.
(Reporting by Krystal Hu and David French in New York and Anirban Sen in Bengaluru; Editing by Matthew Lewis and Jacqueline Wong)