The Starling Bank banking app on a smartphone.
Adrian Dennis | AFP via Getty Images
LONDON – Starling Bank, a digital-only challenging bank in the UK, said on Monday it raised £ 272 million ($ 376 million) in a round of investment.
The new cash injection, led by Fidelity Investments, values Starling at £ 1.1 billion, or $ 1.5 billion. This makes it one of Europe’s unicorn companies, private companies valued at $ 1 billion or more.
Qatar’s sovereign wealth fund, Qatar Investment Authority, also invested in Starling, along with UK pension system Railpen and Millennium Management hedge fund.
“Digital banking has reached a turning point,” Starling CEO Anne Boden said Monday. “Customers are now expecting a fairer, smarter, more humane alternative to the banks of the past, and that’s what we’re giving them at Starling as we continue to grow and add new products and services.”
Boden added: “Our new investors will bring a great deal of experience as we enter the next stage of growth, while the continued support of our existing sponsors represents a huge vote of confidence.”
Starling said it will use the money to expand into Europe and for planned mergers and acquisitions. Last year, the company resumed talks to obtain a banking license in Ireland, after initially suspending international expansion plans due to the coronavirus pandemic. Meanwhile, Boden has already expressed interest in buying a rival lender.
“We will probably acquire something during 2021,” Boden said in an interview last year. “Many lenders will review their future and we are growing very, very fast. We are always looking for opportunities.”
Boden denied a report claiming that JPMorgan and Barclays had shown interest in buying Starling. Earlier, he indicated that the launch would seek an initial public offering.
Starling is one of the most prominent digital banks in Europe. Founded in 2014 by Boden, a former banking executive, the firm has attracted 2 million users and now accounts for 5% of the UK small business banking market, with 300,000 small business customers.
Although national rival Monzo has plummeted, its valuation fell 40% last year amid the coronavirus pandemic, Starling has managed to achieve something many fintechs have struggled with: achieving profitability. The company made a profit of £ 800,000 in October and says it has always been profitable ever since, with a net income now exceeding £ 1.5 million a month. The company says it is now in the process of reporting its first full year of profits.
Starling gained a big boost with coronavirus lending schemes in the UK, becoming one of several fintech technology companies offering government-backed loans to businesses during the pandemic. It now has gross loans of more than £ 2 billion and deposits of £ 5.4 billion.