Starling, the UK’s digital bank valued at $ 1.5 billion, after Fidelity’s support

LONDON – Starling Bank, a challenging digital only bank in the UK, said on Monday that it raised £ 272 million ($ 376 million) in an investment round.

The new cash injection, led by Fidelity Investments, values ​​Starling at £ 1.1 billion, or $ 1.5 billion. This takes him into the ranks of Europe’s unicorn companies – private companies valued at $ 1 billion or more.

Qatar’s sovereign wealth fund, the Qatar Investment Authority, also invested in Starling, along with the UK Railpen pension scheme and the Millennium Management hedge fund.

“The digital bank has reached a critical point,” said Anne Boden, CEO of Starling, in a statement on Monday. “Customers now expect a fairer, smarter and more humane alternative to the banks of the past and that is what we are offering at Starling as we continue to grow and add new products and services.”

Boden added: “Our new investors will bring extensive experience as we enter the next stage of growth, while the continued support from our existing sponsors represents a great vote of confidence.”

Starling said he would use the money to expand to Europe and for early mergers and acquisitions. The company resumed negotiations last year to secure a bank license in Ireland, after initially putting international expansion plans on hold due to the coronavirus pandemic. Meanwhile, Boden had already expressed an interest in buying a rival creditor.

“We are likely to acquire something during 2021,” Boden said in an interview last year. “Many creditors are going to reevaluate their future and we are growing very, very fast. We are always looking for opportunities.”

Boden denied a report alleging that JPMorgan and Barclays showed an interest in buying Starling. She had already indicated that the start-up would seek an initial public offering.

Starling is one of the most important digital banks in Europe. Founded in 2014 by Boden, a former banking executive, the company has attracted 2 million users and now accounts for 5% of the UK small business banking market, with 300,000 small business customers.

Although domestic rival Monzo failed, with its rating dropping 40% last year amid the coronavirus pandemic, Starling managed to achieve something that many fintechs have been fighting for: achieving profitability. The company made a profit of £ 800,000 in October and says it has been consistently profitable since then, with net income now exceeding £ 1.5 million per month. The company says it is now about to report its first full year of earnings.

Starling received a major boost from the UK’s coronavirus lending schemes, becoming one of several fintech firms to offer government-supported loans to companies during the pandemic. Now it has gross loans of more than £ 2 billion and deposits of £ 5.4 billion.