Legal & General (L&G), the FTSE 100 financial services group, has pulled the plug on Onto, one of Britain’s biggest electric vehicle fleet operators.
Sky News has learnt that L&G this week notified Onto, which operates an electric car subscription service, that it would not inject rescue funding into the business.
The decision leaves Onto in a parlous financial state, with the restructuring firm AlixPartners understood to be drawing up contingency plans for a potential administration.
It was unclear on Wednesday whether Onto’s chief executive, Rob Jolly, was progressing with alternative funding plans.
L&G declined to comment, while Onto could not be reached for comment.
If the company does collapse, it will leave L&G facing awkward questions about the extent of its losses.
Sources said the asset management and pensions giant had injected £22.5m into Onto as recently as May and June.
L&G also led a $60m funding round exactly a year ago, saying at the time that Onto was “an ambitious company with a talented management team that will play a vital role in accelerating the transition to electric vehicles”.
The scale of the new funding required by Onto is unclear, although it is said to be substantial.
It also has sizeable debt facilities in place with a number of lenders.
The company is understood to have been hit by the dwindling value of electric cars, with its borrowings secured against its fleet.
Onto gives drivers access to cars made by the likes of Fiat, Peugeot and Vauxhall.
Read more:
Fears deal needed with EU to protect UK car production
Why aren’t more people buying electric cars?
Click to subscribe wherever you get your podcasts
Announcing its investment last year, Wian Pieterse, a managing director at L&G, said: “At Legal & General we’re committed to playing our part in tackling the climate crisis and investing with purpose into companies that do good.
“Onto is an exciting example of this; an ambitious company with a talented management team that will play a vital role in accelerating the transition to electric vehicles.
“We expect to see increasing demand for subscription models that not only pave the way towards a sustainable way of living but also meet the needs of those who don’t want to tie up valuable savings or incur a loan to buy a car.”
Other investors cited in its Series C funding announcement included Accelerated Digital Ventures, Cerebrum Tech Limited, and the family office of Lord O’Neill, the former Treasury minister.
In total, Onto has raised more than $350m to fund its growth.
