Xinja CEO to leave after $433m Middle Eastern deal dies

Fallen neobank Xinja’s chief executive Eric Wilson has resigned, with the company abandoning plans to launch a share trading platform after quietly ending negotiations with its Middle Eastern investor.

Xinja has renamed itself TECHSTACK and informed shareholders last Friday that it would now look to generate revenue by sharing its technology with wealth management and banking companies.

Xinja chief executive Eric Wilson will leave the company he founded in 2017 due to “family ill health”.
Xinja chief executive Eric Wilson will leave the company he founded in 2017 due to “family ill health”. Credit:Dean Richter

Mr Wilson, Xinja’s founder and chief executive, has stepped down citing family health problems and will be replaced with ex-McKinsey and Goldman Sachs consultant Anna Burton, who joined the neobank’s leadership team around 18 months ago.

Xinja became the first Australian bank to return all customer deposits in January after it failed to develop a sustainable business model that would allow it to offer banking services legally.

The decision to ‘pivot’ away from banking shocked shareholders and customers but the company remained solvent and Xinja’s board sought additional capital to develop a US share trading platform called ‘Dabble’.

Three months later, Xinja is ditching Dabble after management determined the product would not be competitive.

“After detailed market analysis it became very clear that this market is rapidly becoming saturated with new entrants, and the limited amount of capital available was not going to be sufficient to achieve a viable market share,” Xinja told shareholders last Friday.

Xinja separately confirmed negotiations with Dubai-based World Investments have officially ended – more than one year after the start-up announced $160 million would be transferred “immediately” as part of a $433 million package.

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“Following the orderly return of our banking licence to APRA, all third party investor negotiations that were based on the holding of that licence came to a logical conclusion,” a Xinja spokesman said.

First Penny Investments’ chief executive Michael Gale, who was involved in brokering the deal, also confirmed it had officially been withdrawn. “World Investments ceased any interest once the ADI license was surrendered and the funds that were set aside for Xinja will simply go into other investments of theirs,” Mr Gale said. “First Penny is not raising money for Xinja and they are no longer an active client of ours.”

The Age and Sydney Morning Herald has previously reported the World Investments contract was highly conditional, despite being presented as a done deal in marketing to potential investors.

Xinja told shareholders it will continue to employ four full-time staff and seek a lower public profile as the team begins “designing services and modifying technologies” to attract customers under its new business model.

“As part of this pivot a new name and brand will be launched in order to better reflect the new B2B marketplace, and we expect the business to have a lower public profile than our previous incarnation,” Xinja said.

Investment firm Mackeller Capital’s chief risk officer Michael Lynch, who was part of an investor push to retain Xinja’s banking license, said “technology dates quite quickly” and few details had been provided on the new business plan.

“What will they do next? It’s a big question mark,” he said. ”There’s a lot of hesitancy given what’s happened. You would need loads more information.“

Mr Lynch added he was “optimistic” about the start-up’s ability to bounce back. “I would hope there’s still some value left in the technology. If they can move quickly enough, they can extract value. Whether or not that happens, I don’t know.”

However, Xinja has previously stated its shares could be worthless and retail investors are not so optimistic. Early investor Mike Samuel said the company was a “sinking ship”.

“If they think the market is overcrowded now for US share trading, who is going to be interested in their platform without any runs on the board?” Mr Samuel said. “They also want to leverage ‘the banking technology’ which I’m sure most would agree was underdeveloped before they hung up the ‘closed’ sign.”

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Source: Thanks smh.com