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UK online lender Zopa worth $ 1 billion in SoftBank-led funding

Jaidev Janardana, CEO of peer-to-peer lender Zopa.

Zopa

London — UK online lending startup Zopa has raised $ 300 million in a led funding round SoftbankIn addition to the surge in investment flowing into Europe’s fast-growing financial technology sector.

The company is now valued at $ 1 billion after a new cash injection, making it the latest European fintech to achieve “unicorn” status, according to sources familiar with the transaction. The source preferred to remain anonymous, as the information was not disclosed.

Founded in 2005, Zopa began its life as a peer-to-peer lender, connecting investors and borrowers through a single online platform. The company then shifted its focus to becoming a full-fledged bank after obtaining a banking license in the UK, but still operates a peer-to-peer market.

Zopa wanted to open a credit card and savings account last year to gain a larger share of the UK retail banking market and take on giants such as Barclays and HSBC. So far, it has a deposit of £ 700 million ($ 961 million), attracting 150,000 credit card customers.

“We are growing our balance sheet rapidly,” Zopa CEO Jaidev Janardana told CNBC. “What this capital can do for us is to accelerate its growth trajectory.”

Zopa is one of several start-ups trying to disrupt the banking sector. So-called neobanks such as Monzo, Revolut and Starling have appeared in the last decade and have attracted millions of customers with their free checking accounts and sophisticated online interface. But so far, they are having a hard time making a profit.

Starling Turned over to black For the first time last year, he said he plans to make his first annual profit. Revolut Recorded a loss of £ 167.8 million ($ 230.6 million) 2020, Monzo Lost £ 130m..But Revolut managed break even Towards the end of last year.

Zopa is more “sustainable” than its rivals, Janaldana said, adding that the company is on track to achieve profitability within 10 weeks. He added that this, along with the use of artificial intelligence by Zopa, is an important factor behind SoftBank’s investment.

“”[Softbank] Share this belief that you can scale faster and compete with existing companies because you can achieve both cost and accurate decision-making benefits by further leveraging technology and AI. ” Zopa CEO said.

Zopa said it generated £ 21.9m in net operating profit in the first half of 2021 and more than doubled from the end of 2020. The company expects to more than double its revenue this year.

Janardana believes Zopa will eventually become one of the UK’s “Big Four” lenders.

“Our view of competition hasn’t changed much. It’s still a big legacy bank,” he said.

Fintech has raised a huge amount of money this year as investors tried to take advantage of the acceleration of digital finance during the coronavirus pandemic.Clarna Raised $ 1.6 billion Revolut in two rounds of funding Got $ 800 million.. Softbank is an investor in both companies.

IPO plan

Zopa said the latest funding will be the last before the planned initial public offering. Janardana aims to open its business by the fourth quarter of 2022. However, the stock market debut will only occur if Zopa shows a “consistent profitability performance”.

“Given the capital we raised, it gives us the flexibility to go then or a little later, depending on the market conditions,” said Janardana, making the London market “a natural place for us.” Added.

The UK is trying to attract more high-growth tech companies to the stock market after Brexit.The reforms proposed earlier this year will ease that rule in London. Blank check company When Founder-friendly shared structure..

In addition to SoftBank, Zopa’s latest investment round was supported by Abu Dhabi-based asset management firm Chimera Capital and existing investors such as IAG Silver Stripe, Davidson Kempner and North Zone.

Zopa is one of the few fintechs that still operates a peer-to-peer marketplace in social lending spaces. Domestic rival Rate Setter closed its P2P business after being sold to British creditor Metro Bank, while LendingClub in the US did the same thereafter. Acquire a regulated bank..

Asked if Zopa could eventually retire its P2P division, Janardana said the company would continue to review the market.

“We’ll see how the market evolves,” he said. “There’s a lot we’ve learned there about finding the right clients to lend and getting investors to make a good profit. Some of them are very useful for future strategies.”

UK online lender Zopa worth $ 1 billion in SoftBank-led funding

Source link UK online lender Zopa worth $ 1 billion in SoftBank-led funding

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