UK-based fintech Railsr has reportedly started to explore the possibility of a sale through a pre-pack administration due to mounting financial and regulatory issues, according to Bloomberg . Sources familiar with the matter have stated that Railsr’s directors are in discussions to sell the company through this process, which involves lining up a buyer beforehand.

Restructuring firm Alvarez & Marsal has been appointed to advise on the process. However, a sale has not been finalised, and there is no guarantee that it will occur. Railsr, formerly known as Railsbank, was once considered a promising player in the UK payments sector, and its CEO Nigel Verdon described it as a ‘near-unicorn’ worth almost USD 1 billion in 2021.

However, the company has faced significant financial and regulatory challenges, which have raised concerns about its stability. In October 2022, the company announced a USD 46 million fundraising round, including a USD 20 million debt facility from Singapore-based fund Mars Growth Capital. However, it is reported that Mars demanded repayment of its borrowed funds amid concerns over Railsr’s stability, and the company repaid the loan late in 2022.

Regulatory authorities have also been scrutinising Railsr, with the Financial Conduct Authority reportedly auditing its UK subsidiary for several months, and the Bank of Lithuania recently preventing its local unit from taking on new customers, citing concerns over potential violations of anti-money laundering and terrorist financing laws. Railsr’s regulated UK and Lithuanian subsidiaries, which operate under the Payrnet brand, are licenced electronic-money institutions that process payments. Railsr had previously been in talks to sell itself to Nigerian fintech firm Flutterwave, but these discussions were ultimately unsuccessful.

A pre-pack administration could allow the company to be sold as a going concern, which could preserve the value of assets and potentially save jobs. However, the situation is still developing, and it is unclear whether a sale will occur or what form it might take. A Railsr spokesperson, Emma Thompson, has stated that the company is hopeful that it will find a safe harbour for the business that will enable it to continue fully operational and recapitalised.

Interested parties are said to be in discussions with the company as part of its M&A process, and a buyer could potentially purchase the technology, people, and assets of Railsr's regulated subsidiaries through administration. More about Railsr Railsr has been recently mentioned in The Paypers’ partnerships and investments pieces focused on Q4’22. In November 2022, Railsr partnered US-based Everi to develop an embedded credit and loyalty offering for the casino industry.

Also in November 2022, the company launched Insights, a dashboard to help brands track, manage, and improve the end-to-end experiences of their customers. .