A Chinese technology giant has taken a stake in Monzo. Tencent Holdings, which has become a major investor in European tech companies in recent years, has snapped up shares in the digital bank as part of a $100m (£74m) top-up to Monzo’s latest funding round.
Tencent is understood to have taken a small stake in the UK-based lender, which now has a valuation of more than $4.5bn (£3.3bn).
The move adds another prominent investor to Monzo’s share register, alongside the Abu Dhabi Growth Fund and Coatue.
However, it could also pose questions over the new national security legislation that takes effect on Tuesday, which currently does not include tech or finance companies.
Whitehall has pledged to use its new powers when there is a risk of harm to government or defence assets, and if it needs to stop hostile foreign powers from building defence or technological capabilities that could threaten the UK.
In October, more than 100 MPs called for their Parliamentary Pension Fund to ditch stakes in Chinese companies, including Tencent.
The move came after research from Hong Kong Watch, a pro-democracy group, revealed the scale of the fund’s investment in Chinese tech giants and banks.
The letter from a cross-party group of 134 MPs and peers said: “Aside from being two of the largest technology companies in China, Alibaba and Tencent regularly collaborate with the Chinese state in maintaining internet censorship through the ‘Great Firewall’ and have provided the government with surveillance patents for software which has been put to use against the Uyghurs.”
TS Anil, Monzo’s chief executive, said: “The high level of investor interest we’ve had in this round is testament to our performance as well as the huge opportunity that lies ahead.
“With the backing of some of the best names in the investment community, we’re going into next year with big ambitions – and we’re just getting started.”
Tencent previously backed European banking start-ups such as Germany’s N26 and also holds stakes in major US tech companies, such as Tesla and Snap.