Atom Bank valuation set to halve after latest fundraising round
The valuation of digital lender Atom Bank could halve as it closes its latest fundraising round.
Atom announced its £40m fundraising last month claiming it would put it “on the path to profitability in the near term”. But the challenger bank is now close to concluding a round at 60p-a-share, just under half the price at which it raised two years ago, according to Sky News.
Existing investors Spanish bank BBVA and private equity form Toscafund will shore up their stakes in Atom Bank as Schroders dilutes its share.
Atom Bank had been a recipient of Neil Woodford’s cash through his Patient Capital Investment Trust before its collapse. Schroders, which took over the management of the fund, will reportedly not be taking part in the fundraising round.
No doubt the sharp drop in valuation will raise questions about new lenders in the current low-interest environment but Atom has had a strong year nonetheless.
Its balance sheet has grown to over £700m helped by a rebound in demand from homebuyers and its participation in the government’s lending schemes.
Since its launch Atom has loaned £2.8bn to mortgage customers and has added £362m of mortgages in the second half of the year.
“We’ve been there for new and existing customers during the pandemic, and in a year when we have held our operating costs constant I’m delighted that we have coupled substantial income growth with an enviable record of customer experience,” chief executive Mark Mullen said a few weeks ago.
The bank announced the £40m fundraising would help with profitability ahead of an IPO in the next few years but Mullen made no mention of the reduced valuation.
“Despite it being a difficult environment for all companies that need to raise funding, this capital raise will allow us to continue to progress towards profitability and ever-improving levels of efficiency and engagement. The team retains an IPO as our objective,” Mullen added.
Atom Bank declined to comment on its valuation.