(Bloomberg) -- UK financial technology startup Zepz, parent of WorldRemit, has struggled with its accounts and turnover in its senior ranks prior to a potential initial public offering, according to people familiar with the matter.
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Zepz, which helps consumers transfer money around the globe, had been planning an IPO seeking a valuation of as high as $6 billion (5 billion pounds) as soon as the second quarter, people with knowledge of the matter told Bloomberg in February.
The London-based startup struggled to do checks on certain customer accounts in a timely manner, the people said, who asked not to be identified because they were not authorized to speak to the press. The issues caused a delay to IPO preparations, according to two people with direct knowledge of the matter. The problems have since been solved, one of the people said.
Zepz had a “robust team of individuals who monitor activity globally to ensure that every transaction on the group’s platforms is carried out ethically and accurately in conjunction with our correspondents,” said a spokeswoman, adding that the allegation that the company had accounting issues was “speculative and factually incorrect.”
Founded in 2010 as WorldRemit, Zepz has also suffered from what the former employees describe as a convoluted management structure and high churn among senior-most staff. The company had four executives with the “CEO” title, and has had three chief marketing officers within the last year. WorldRemit’s Chief Technology Officer and Chief Financial Officer both departed since December.
Chief Executive Officer Breon Corcoran outlined plans in February to cut roughly 5% of WorldRemit’s workforce, freeze pay for most employees, downsize the London office and cut the marketing budget by $40 million. Corcoran then departed the firm in June weeks later. A replacement will be announced in the coming weeks.
“Zepz leadership internally shared a strategy to reduce our cost base and seek a stronger degree of financial independence, to ensure that we can service our millions of customers around the world sustainably and independent of further external funding,” said the spokesperson, adding that the company hadn’t announced a timeline for an initial public offering.
WorldRemit was founded by Ismail Ahmed -- who arrived in the UK as a refugee from Somalia’s breakaway region of Somaliland -- after he grew frustrated with the high transaction fees charged by other services to send money to his family in East Africa. The company raised nearly $300 million in funding at a $5 billion valuation in August from investors including Farallon Capital, Leapfrog, TCV and Accel, making it one of the most valuable UK startups.
About eight months ago, Zepz hired outsiders from consultancy Grayce to help the company with its accounting, according to a person familiar with the matter.
“Grayce analysts were onboarded to support on reconciliation work,” a Grayce representative said.
The focus for Zepz now is reaching profitability, given sagging investor confidence in loss-making tech startups and IPOs, the people said. Publicly-traded peers such as Wise Plc and Remitly Global Inc have seen their shares tumble roughly 70% since late September as analysts question their exposure to consumer spending and place in an increasingly competitive market.
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