Digital Bank Zopa Is Reportedly Planning to Raise £100M at £500M+ Post-Money Valuation IPO, with JPMorgan Advising

Digital bank Zopa will be working with JPMorgan which will serve as an advisor on a £100 million funding round. This, according to a report from Sky News, which noted that investors who have been approached regarding the investment round have been considering a £500 million+ post-money valuation.

In March 2021, Zopa had secured £20 million in capital from existing investors after acquiring around £250 million in deposits – which came after the company introduced its app-only banking platform in 2020.

Initially introduced with a 1-to-5 year fixed term savings account, the banking operation has now diversified into credit cards, unsecured loans, and auto-finance (lending £5 billion to clients).

Zopa’s management noted that they’ve seen annualized revenue per client nearly double during the period since launch. The new round of funding may be the company’s last major move before it decides to go public within the next 18 months.

As covered last month, Zopa had partnered with CreditLadder to help renters improve their credit score thus increasing their eligibility for a Zopa loan. Zopa noted that the integration was accomplished using Open Banking tech.

As renters do not have monthly rental payments added to their credit file, Zopa will now include the data making loans easier to receive and perhaps at a lower cost. Zopa’s credit score tool and loan eligibility checker, Borrowing Power is a free tool in the Zopa app that calculates a customer’s financial health score, recommends targeted actions to help them improve it and links directly to their eligibility for Zopa products. CreditLadder data will now be incorporated in the Borrowing Power score.

Zopa highlights that CreditLadder is the UK’s first and biggest rent reporting platform and has reported close to £500 million in rent payments on behalf of tenants.

In May 2021, Zopa rolled out a “test and learn approach” for the future of workers by allowing all employees to work from wherever they want – including up to 90 days abroad.

COVID has forced most companies to reassess working arrangements as virtual offices became the norm. Zopa says that 80% of its employees are interested in a blended work environment, allowing for time at the office as well as at home. Zopa will assess the test during the year looking for employee satisfaction and overall productivity.

Zopa originally launched in 2005 as a peer-to-peer lending platform and helped to define the online lending sector. In the past year, Zopa has morphed into a digital bank that will continue to offer credit products to its customers.

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