Wefox is set to replace CEO Mark Hartigan after the board of the German insurance tech start-up rejected a sales plan backed by its largest stakeholder, Mubadala Investment, reported Bloomberg, citing sources.
The decision comes amidst a broader strategy to restructure the financially challenged company.
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Hartigan, who assumed the role in March and backed Mubadala’s divestment, will step down by the end of the year, sources privy to the development disclosed.
The board also sanctioned a convertible loan agreement from investors Chrysalis Investments and Target Global, amounting to approximately €25m.
Further capital-raising efforts are under way, with Wefox engaging in discussions to divest its e-bike insurance subsidiary Assona, which is expected to generate at least €50m, the sources said.
Wefox, Mubadala, Chrysalis and Target have refrained from commenting on the developments, the publication said, adding that requests for comment from Hartigan were not answered immediately.
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By GlobalDataThe recent developments represent a shift for Mubadala, the $300bn (Dh1.1trn) Abu Dhabi wealth fund, which has been intensifying its involvement with loss-making start-ups that it supported during the venture capital surge propelled by low-interest rates.
Separately, Mubadala has agreed to acquire a controlling interest in Turkish food delivery company Getir, which includes a CEO change as part of a fundraising agreement.
Operating across eight countries with more than two million customers, Wefox is grappling with liquidity issues as the insurance sector’s funding demands put a strain on its financial resources.
Earlier this month, Mubadala proposed offloading Wefox to UK-based Ardonagh Group.
Now, Mubadala, which is not participating in the latest fundraise, is weighing its options, the sources said.
Hartigan, with prior executive experience at Zurich Insurance and as head of LV=, joined Wefox last year as a non-executive chairman.
He succeeded co-founder Julian Teicke as CEO in March due to escalating financial challenges at Wefox.
The Berlin-based company reported losses exceeding €100m last year and is facing up to €70m in additional capital requirements through to the end of 2024, as per a Mubadala presentation seen by the news agency.
The founders of Wefox and some early investors resisted the sale to Ardonagh, which valued the start-up at nearly €550m, fearing a total loss of their stakes.
Wefox’s valuation stood at $4.5bn during a funding round led by Mubadala two years ago. An extraordinary shareholders’ meeting for Wefox is scheduled on 28 June 2024.
