Challenger bank Dave to go public through $4 bn SPAC deal

American Challenger bank and personal finance app Dave has announced that it plans to go public through a merger with a blank-check firm sponsored by investment firm Victory Park Capital. With this, the banking app’s valuation has ballooned to $4 billion amidst a pandemic that has boosted the need for online banking services. 

In a press statement, Dave said that over 10 million customers use its personal finance tools and about 1.3 million customers use its digital banking platform. Launched in 2017, the Los Angeles-based banking app helps users avoid billions of dollars in overdraft fees charged by traditional banks. Dave counts Norwest Venture Partners, Mark Cuban, SV Angel, and Chernin Group as its prominent investors. 

Dave’s Founder and CEO Jason Wilk said, “We believe the legacy financial system has failed to deliver and today. More than 150 million people need our help to build financial stability. Dave is upending the banking industry with our suite of breakthrough financial products and making a meaningful impact on our customers’ lives. This transaction and continued support from our longstanding investors signify confidence in our strategy, vision, and the significant growth opportunities ahead.

The deal with a special-purpose acquisition company (SPAC), VPC Impact Acquisition Holdings III Inc (VPCC.N), includes a $210 million investment led by Tiger Global Management, with additional participation from Wellington Management and Corbin Capital Partners. SPAC is a blank-check firm that seeks to merge with a privately owned entity. This deal type has become highly popular in the last few months. 

Centerview Partners LLC served as the exclusive financial advisor to Dave, the press statement added. Citigroup and Jefferies acted as capital markets advisors to VPCC and co-placement agents on the investment.

Apart from Dave, challenger banks such as Chime, the nation’s largest digital bank, is reportedly also eyeing a public offering that would value the fintech at more than $30 billion.

 

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