Zopa Bank has successfully secured £80m from its inaugural bond listing on the London Stock Exchange, a strategic move as it prepares to introduce current accounts.
The fintech firm is set to transition into an unlisted public company within the next six months post-transaction, edging closer to a potential LSE flotation, as reported by City AM.
The fundraising round, which was oversubscribed, took place on the International Securities Market (ISM) of the London Stock Exchange.
By raising Additional Tier 1 (AT1) capital, Zopa Bank aims to fortify its financial resilience through the issuance of special bonds designed to mitigate losses during challenging times.
This capital injection comes at a time when the lender has experienced swift growth, with pre-tax profits soaring to £34.2m in the financial year 2024. Additionally, the company is looking to double its office space by relocating to Canary Wharf.
The company’s revenue saw a significant increase of 30.2 per cent, reaching £303.4m, propelled by a more than 60 per cent jump in its deposit base to £5.5bn.
In a conversation with City AM, Steve Hulme, the CFO of Zopa, remarked: “Our latest capital raise is another strong vote of confidence in Zopa’s momentum and model.”
He further added, “Following a successful equity round just six months ago, this non-dilutive capital strengthens our balance sheet and positions us firmly on the starting line for our bank account launch.”
Treasury makes play for fintech IPOs
The news of Zopa’s fundraising comes alongside reports from Tuesday that the Treasury is actively engaging with fintech unicorns to encourage more IPOs.
Emma Reynolds, the Economic Secretary to the Treasury, has held meetings with executives from ClearScore, Monzo, OakNorth and Revolut.
Zopa’s recent capital raise comes during a volatile period for the London Stock Exchange, with Revolut’s CEO Nik Storonsky previously criticising the exchange for its lack of liquidity compared to its US counterparts.
However, Zopa’s successful fundraising suggests that there is still investor interest in fintech.
Hulme confirmed that an IPO is not currently a priority or imminent plan for Zopa, but identified London as the logical choice for any future listing.
Jaidev Janardana, Chief Executive at Zopa Bank, previously told City AM: “We do not have a timeline. We’re just really focussed on building the business.”
Zopa has recently entered into a partnership with Octopus Energy, one of Britain’s leading electricity suppliers, to break into the UK’s £23bn renewable energy market in 2024. The fintech firm has also teamed up with retail giant John Lewis to offer personal loans to its 23 million customers.
Hulme stated that partnerships will continue to be a key part of Zopa’s operations as they enter a new phase of “rapid acceleration.”
