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Herbert Smith Freehills advises on sale of Earnd to Greensill Capital

Herbert Smith Freehills’ private equity and venture capital team has advised on the sale of 100% of Earnd to Greensill Capital. Founded by Josh Vernon and Serge Kotlyarov, Earnd’s platform enables employees to access their pay packet on-demand as they earn it, facilitated through their employer payroll systems.

The Herbert Smith Freehills team was led by partner and Australian Head of Venture Capital Peter Dunne, consultant Elizabeth Henderson, and solicitor Lisa Alderson.

Elizabeth Henderson said, “Earnd is an incredible example of Australian fintech innovation and business talent. In less than two years, Earnd has grown from a small start-up into a serious challenger in the financial services space. We have enjoyed working with Earnd’s founders and investors who believed in the company and have enabled it to reach this great milestone.”

Earnd’s co-founder and CEO, Josh Vernon, said, “Peter, Elizabeth, Lisa and the team at Herbert Smith Freehills were incredible partners throughout the acquisition process. We felt as if we had a friendly yet deeply professional and competent team on our side and, for a first-time founder, they made the journey a breeze. It was nothing short of a pleasure working with them and we look forward to working together in the future.”

This deal is another example of Herbert Smith Freehills’ market-leading work in Australian venture capital. Other recent examples include:

  • Adairs Limited in its NZ$80 million acquisition of Mocka Group from its founders;
  • Deputy Group on its A$111 million Series B capital raise;
  • Culture Amp on its A$120 million Series E capital raise;
  • Nura on its A$21 million Series A capital raise;
  • Expert360 on its A$12 million Series C capital raise;
  • Roborigger on its Series A capital raise; and
  • Reejig on its Series Seed capital raise.

Start-up Company Gears Up For European Expansion

A startup or start-up is a company or project undertaken by an entrepreneur to seek, develop, and validate a scalable business model.

Browne Jacobson’s corporate technology team has advised the founders of InsurTech startup Laka on raising $4.7m funding to fund the next stage of its growth strategy.

The round was led by leading venture capital firms LocalGlobe and Creandum, with Yes VC and prominent angel investors, Nick Evans and Oren Peleg, amongst others, also investing.

The investment will be used by founders Ben Allen, Jens Hartwig and Tobias Taupitz to grow its footprint across Europe, establish its European Union base in the Netherlands later this year and further develop its product portfolio. This will include a recovery and health product designed specifically to help cyclists who have experienced injury or accident to access the right services.

Founded in 2017, Laka specialises in insuring high-end bicycles in the United Kingdom and has developed a unique insurance model in which the cost of claims is split fairly between customers, with premiums capped at market rate for customer protection. Fewer claims lead to lower costs. On average Laka’s users have saved more than 80% compared to market prices.

Browne Jacobson’s London based team comprised corporate technology partner Jon Snade, associate Harry Pearson and senior associate Nicole Judah. Jon also led the team that advised Laka on its last successful seed round in 2018 which raised $1.5m.

Browne Jacobson has built a reputation for its innovative approach to delivering legal services to start-ups following the launch of the Grow programme in 2017 and which is tailored specifically for high-growth companies at any stage of the start-up journey.

The firm works with over 100 high-growth businesses across a broad range of sectors but notably in InsurTech and FinTech.

Pinsent Masons gets cloud guidance improved for insurers

International law firm Pinsent Masons has seen a number of its recommendations enacted following its response to EIOPA’s consultation on cloud guidance, making it easier for insurers to comply with their regulatory requirements.

The guidance, which sets to place strict regulatory demands on insurers in respect of both the contents of their contracts with cloud providers and their governance of those contracts, has been under review since June 2019, with the final guidelines now being issued.

In its response to the consultation, the firm raised a number of concerns about both the wording of and rationale for some areas of EIOPA’s draft guidance. Those concerns addressed fundamental matters such as the scope of the guidance and potentially confusing concepts and terminology. They also focused on the requirements around the content of insurers’ cloud contracts, their exit planning, the extent of information that insurers would have to document about their contractual requirements, and the location of data in the cloud.

Pinsent Masons’ recommendations have led to the re-drafting of certain definitions, the removal of unclear language and greater clarity and alignment with the European Banking Authority (EBA).

Some of the changes included the removal of references to ‘material outsourcing’ to describe the concept of a ‘critical or important operational function’. EIOPA also agreed to drop plans that require insurers to assume that their purchase of goods or services from, or entry into arrangements with, cloud providers constitute outsourcing arrangements that are subject to its guidance in cases where the matter is unclear. They also deleted wording around having ‘directly measurable’ service levels specified in contracts after the firm said it was it was unclear how insurers could comply with that obligation.

Commenting on the guidelines, head of Fintech propositions at Pinsent Masons, Luke Scanlon said: “When regulators bring out guidance and impose rules which vary slightly from other requirements for regulated entities, this can lead to unintended consequences and cost for financial institutions. Ultimately, this cost is borne by the customer and therefore it is positive to see that EIOPA has taken the views of the sector into account and made some adjustments to its final guidance.

“In our response to the consultation we put forward the views of our clients impacted by this guidance to ensure that the final guidelines are fit for purpose. This is particularly important following recent data from the Bank of England which shows that insurers are falling behind with regards to the adoption of cloud based technology in comparison to banks. We hope that these changes will now facilitate far greater adoption across the sector.”

All new cloud outsourcing arrangements entered into or amended on or after 1 January 2021 will be subject to the guidelines, while insurers will have until the end of 2022 to bring cloud outsourcing contracts entered into prior to that date into line with the new requirements.

Browne Jacobson tech team advises on £208m Hastee investment

Browne Jacobson’s corporate technology team has successfully advised London fintech start-up Hastee on securing £208m of funding, comprising of both equity and a unique credit facility, including on the corporate aspects of a new, unique £200m credit line. The investment was led by Umbra Capital and supported by IDC Ventures and others.

Established in 2017 by James Herbert, Hastee will use the investment to develop and grow its award winning, revolutionary Hastee app which allows workers immediate access to 50% of their earned pay on-demand, reducing reliance on payday loans, credit cards and overdrafts.

An employee can withdraw up to £100 free of charge every month. Subsequent withdrawals are subject to a 2.5 per cent transaction fee. The employee withdrawals are initially funded by Hastee which is subsequently reimbursed by employers on each normal pay day. There is no cost to employers and the solution can integrate with existing HR and payroll processes. Clients include London City Airport, IRIS – the largest privately held software company in the UK, recruitment specialists Brightsparks, Avery Care Homes and pub and restaurant operator Mitchells & Butlers, whose brands include All Bar One and O’Neill’s, amongst others.

Browne Jacobson’s London based team of Jon Snade and Harry Pearson advised Hastee on all legal matters of the investment, as well as assisting with the corporate aspects of a new £200m credit line from Umbra, which will be used to pay employees directly.

James Herbert, Hastee founder and CEO, said: “We are delighted that our investors, led by Umbra, have chosen to partner with us as we bring financial freedom to people across the country. This investment will help us support a greater number of organisations in reducing financial stress, increasing wellbeing and improving the productivity of their employees and, as a result, their organisations.”

Browne Jacobson corporate finance and tech partner Jon Snade added: “We are delighted to have advised Hastee on this significant investment package for the business. Hastee has seen incredible growth since it was formed two years ago and this latest investment will play a huge role in helping to reach new clients and sectors. It shows that there remains a strong appetite amongst investors in fintech starts ups such as Hastee that offer cutting edge tech solutions which have strong prospects of delivering a healthy return on investment.”

Browne Jacadvobson has built a reputation for its innovative approach to delivering legal services to start ups following the launch of its hugely successful Grow programme in 2017 and which is tailored specifically for high-growth companies at any stage of the start-up journey. The firm works with over 100 high-growth businesses through Grow across a broad range of sectors but notably in fintech and insurtech.

Specialised Banking License in Lithuania

Lithuania and mainly its capital Vilnius became a new flagship of European banking services centres. Favourable regulatory and tax environment, excellent infrastructure, fast Internet, cheap office space and the ability to select high-quality budget personnel make Vilnius attractive for both large international banking institutions and FinTech start-ups.

Moreover, in 2018, the Central Bank of Lithuania won the Central Banking FinTech RegTech Global Awards for its comprehensive approach to regulating the provision of financial services, namely in creating a favourable environment for the development of financial technologies and openness for financial service providers. Are there any other arguments for choosing this jurisdiction for the Fintech project?

In this article we will talk about a unique offer – a specialised banking license in Lithuania with reduced requirements for authorised capital – what is it about? How to get such a banking license? What functionality does this type of license cover?

What is a specialised bank?

Specialised banking license is a concept introduced in Lithuanian legislation from January 1, 2017 as a type of universal banking license. The main difference of this type of license is the requirement for the size of the authorised capital. The standard size of the authorised capital for the European Bank is 5 million Euros, while the Specialised banking license in Lithuania is issued for a company with the authorised company only 1 million Euros. It significantly simplifies the creation of your bank, isn’t it?

Functional authority

The terms of reference that this license gives its owners are very extensive – a company with a specialised banking license has the right to provide the following services: receiving deposits and other repayable funds; lending; financial leasing; payment services; issuance and management of travellers checks, bank checks and other means of payment; providing financial guarantees; financial inter-mediation; money management; credit rating services; safe rental; currency exchange; issue of electronic money.

The only functional difference between a specialised and a universal banking license is the presence of restrictions on providing investment services, management of investment and pension funds, and other similar activities. However, in practice for these purposes an alternative company is registered with the subsequent receipt of a permit for investment activity and asset management of third parties.

Conditions for obtaining a banking license

The times for obtaining a specialised banking license in Lithuania is another incredible advantage of this type of service. With such broad powers, a company licensing takes from 6 to 12 months after providing all of the necessary documentation. Capital requirement, as mentioned above, is only 1 million Euros.

Also, to obtain such a banking license, you will need to confirm the economic presence of your company in Lithuania: you need a real local office, the minimum number of bank management staff must be 10 people, but at least one of them must be a resident of Lithuania and speak Lithuanian.

Brexit and Lithuanian specialised banking license

Brexit made adjustments even to the functioning of well-known FinTech start-ups – the “certification” of companies’ activities became an issue. What does it mean?

International financial companies licensed in the UK are looking for the possibility of licensing their services in one of the EEA countries to provide services to residents of the entire zone. For these purposes a specialised bank in Lithuania is suitable like no other – a wide range of powers, comfortable licensing terms, minimal authorised capital. Who would you think in the forefront received a specialised banking license, rather than the famous financial institution Revolut? It’s worth to consider.

Our team is happy to offer you not only a full package of services for obtaining a specialised banking license in Lithuania, but also assistance in opening corporate and segregated accounts, obtaining membership in SEPA and SWIFT, connecting to Visa/Mastercard, as well as other legal support issues of your project. Get an advice on establishing your Specialised bank in Lithuania today. SBSB International Law Company – your business, our concerns.

SBSB FinTech Lawyers

SBSB FinTech Lawyers