An award-winning British technology start-up backed by Goldman Sachs has been sold to its biggest rival after being forced to call in administrators.
Sky News has learnt that Neyber, which counts Asda, the Co-op Group and Royal Mail among its corporate clients, was taken over on Monday by Salary Finance.
The deal, which came after weeks of talks, is understood to have seen Neyber’s assets sold for a meagre sum.
BDO was appointed as administrator to Neyber before its assets were sold to Salary Finance, whose shareholders include the FTSE-100 company Legal & General.
Founded in 2014, Neyber had boasted of raising more than £100m from Goldman’s merchant banking arm and other investors including Police Mutual, which looks after the savings of serving and retired police officers.
Its takeover by Salary Finance creates a workplace lender – which deducts loans directly from customers’ salaries – with more than 500 corporate partners, including BT Group, the NHS, Dixons Carphone and Virgin Active.
Among the combined client base will be 15 FTSE-100 companies.
As part of the deal, both Goldman and Police Mutual have become small shareholders in the enlarged business.
Salary Finance’s operations in the US are expected to benefit from Goldman’s major presence there.
The transaction will be announced publicly on Tuesday, according to insiders.
Goldman’s earlier investment in Neyber comprised a small sum in equity and between £70m and £100m in debt drawn down by the Neyber vehicles which issue loans to customers.
The takeover by Salary Finance creates a lender with a potential customer base of about three million people.
Salary Finance offers a broad set of financial products aimed at improving employee wellbeing, including salary-linked savings and investments, loans, on-demand access to life, income and critical illness insurance, and financial education.
Two of Neyber’s co-founders had repeatedly denied suggestions that it was in financial distress, insisting that its focus was on raising capital independently to help it grow more quickly.
It was unclear on Monday whether they, or the rest of Neyber’s workforce, would be employed by Salary Finance.
Watchdogs had been monitoring the situation at Neyber, which is regulated by the Financial Conduct Authority.
Since its launch, Neyber – which described itself as “the UK’s number one financial wellbeing provider” – had positioned itself as a cheaper consumer alternative to credit card companies and payday loan providers.
It utilises internal employee benefit systems, with loans repaid directly from customers’ salary payments – a mechanism that Neyber claims significantly reduces default rates.
The development of the sector has come during a period in which the treatment of persistently indebted customers by mainstream banks has come under intense regulatory scrutiny.
Payday lenders have also seen their fortunes rise and fall, with major providers such as Wonga and QuickQuid disappearing in the wake of a cap on charges.
The emergence of salary-deducted consumer loan providers has formed one attempt to fill this gap, although self-styled ethical providers like Neyber have, nevertheless, struggled financially.
Salary Finance also operates across the US, where Goldman Sachs is well positioned to support business growth.
Asesh Sarkar, Salary Finance’s co-founder and chief executive, said: “The Salary Finance mission is to help millions of employees around the world become financially healthier and happier.
“The Neyber acquisition, and the additional scale that gives us, takes us several steps forward in achieving our mission.
“Salary Finance addresses a social problem, and market failure, where 40% of UK employees have no savings, and over six million employees have been refused a high street loan, leaving them little option but to take high interest debt.”