Searchlight Capital Partners, the private equity firm which has backed companies including Secret Escapes, is to lead a new funding package for Wefox, the European insurance company, that could be worth up to €170m (£141m).
Sky News has learnt that Searchlight has effectively proposed stepping in to refinance Wefox’s existing bank debt as the group seeks to avoid a fire-sale of its most prized assets.
Banking sources said a deal was close to being struck with Searchlight, which would be accompanied by an equity-raise of between €80m (£66.5m) and €100m (£83.1m).
Last month, Sky News revealed that existing shareholders in Wefox, which operates across a swathe of European markets, were preparing to back a fresh cash call.
This group is understood to be led by Chrysalis, the London-listed investor in companies such as Klarna and Starling Bank, and Target Global.
One banker said that if completed, the wider refinancing deal involving Searchlight could be announced as soon as next month.
The share sale has been designed to allow Wefox to avert a sale of TAF, one of its prized subsidiaries.
It said earlier this month that it had reached an agreement to sell its insurance carrier arm to a group of Swiss companies led by BERAG, an independent provider of pension services.
Wefox is also backed by prominent investors including the Abu Dhabi state fund Mubadala.
The company has twice this year warned that it faced running out of money within months.
It has been ravaged by losses in a number of its key markets including Italy, although its operations in the Netherlands remain profitable.
The company was valued at $4.5bn (£3.6bn) in a funding round less than two years ago and counts Barclays and JP Morgan among its lenders.
It is now valued at far less than the $1bn (£796m) needed to preserve its status as a tech unicorn.
Earlier this year, the company bought itself time by raising roughly €20m (£16.6m) from existing investors, while it has also sold Assona, a subsidiary which offers insurance cover for electric bikes.
Founded in 2015, Wefox sells insurance products through in-house and external insurance brokers, and has frequently boasted of its ambition of revolutionising the insurance industry through the use of technology.
It has more than 2m customers across its business.
In July 2022, Wefox raised a $400m (£318m) Series D funding round valuing it at $4.5bn (£3.6bn), making it one of the largest fintechs in Europe.
That followed a $650m round in May 2021 valuing it at $3bn, reflecting the frothy appetite of investors to back scale-ups regarded as having the potential to become global competitors of genuine scale.
Neither Wefox nor Searchlight could be reached for comment.