Zopa raises £75m debt as fintech bank eyes public markets debut
Fintech lender Zopa Bank has raised a fresh £75m round of debt financing today to boost its coffers ahead of a much-anticipated float on the public markets.
The London-based bank, which has been open about its ambitions for an IPO in recent months, said today it had raised £75m of tier-two capital through a ten-year bond, meaning it has not been forced to sell any further equity in the bank.
The fundraising comes as Zopa looks to beef up its balance sheet ahead of a potential float. A string of senior executives have also joined the bank in recent months to build up its regulatory and public markets expertise in preparation for the IPO.
Zopa’s chief Jaidev Janardana told Morning Wire that profitability had been key to raising the bumper debt round.
“What I have been pleased about is the quantity that we have been able to raise,” he said.
“Among banks our size, people are not able to get that much because when you’re looking at it from a debt perspective, you need to have profitability so you can pay the coupon on a regular basis.”
He added that the money would now be used as a “capital runway for a lot of growth”. The debt raise follows a £75m equity injection earlier this year which the bank has used to fuel acquisitions.
Zopa swung into the black for the first time last year and said it is now expected to hit full-year profitability for the first time this year
Unlike some of its fintech lending peers, Zopa has taken a more restrained approach to growth and focused on delivering profitability.
The approach has come under fire from some of its investors, with Augmentum fintech chief Tim Levene calling for the bank to ramp up its ambitions.
“It is about striking the right balance and in my view [Zopa] is not in a position where it has to focus on profitability at all costs, at the expense of growth,” he said in February.