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Atom Bank raises £75m as it targets ‘likely’ IPO in 2023

Atom Bank CEO and founder Mark Mullen. The bank is likely to IPO in 2023.

UK fintech Atom Bank has raised £75m at a £435m valuation as it gears up for an initial public offering (IPO) that’s “likely” to take place next year.

The raise is being led by the digital bank’s two biggest shareholders, BBVA and Toscafund. Infinity Investment Partners also provided funding and Atom Bank has opened the round to other existing shareholders.

The equity sale was priced at 70p per share. It brings the Durham-headquartered challenger bank’s total funding to around £500m, with £115m of that coming in the last year.

Atom Bank told UKTN that it is yet to decide whether it will IPO in the UK, or which exchange it will choose. The latest funding round is expected to be Atom Bank’s last raise before it goes public, with a spokesperson adding that this will “likely” take place in 2023.

Launched in 2016, the digital lender has no physical branches and is accessible via a smartphone or tablet and has received a full UK regulatory licence.

Atom Bank provides savings accounts, mortgages and loans to small and medium-sized enterprises (SMEs).

It says its mortgages and business loans have grown by 30% in the past nine months and that it passed £1bn in SME lending in 2021.

While the bank is loss-making, it reported its first operating profit in its second fiscal quarter last year and says it is heading towards profitability.

“Our investors are now backing our continued growth,” said Mark Mullen, CEO at Atom Bank. “This capital will allow Atom to build on the progress we have made, and to keep offering real competition for people who want to own their own home, grow their own businesses and – at a time of rapidly rising costs – save for the future. It is also a fundamental next step on our journey toward IPO.”

Atom Bank’s valuation plummet during a £40m equity raise in April 2019, dropping to £300m from a £555m peak in 2019. In 2017 the company secured £83m at a £261m valuation.

In November, Atom Bank switched to a four-day working week for all of its 470 employees without cutting pay. The company said it has since seen a 500% increase in job applications and has increased the three-month trial by another three months.

Atom Bank isn’t the only challenger bank revamping its working practices to attract and retain top talent. Fellow neobank Monzo recently introduced a three-month paid sabbatical for staff who have worked at the digital bank for four years.