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Starling Bank raises £130.5m for acquisitions ‘war chest’

Starling Bank acquisitions

British challenger bank Starling has completed a £130.5m fundraise from previous investors to “build a war chest for acquisitions”.

The latest funding came at a pre-money valuation of more than £2.5bn for the London-headquartered digital bank.

Funds came from all of Starling’s previous backers, including Goldman Sachs Growth Equity and the Qatar Investment Authority.

“This will enable us to continue our growth and to build a war chest for acquisitions. We are looking at a number of potential targets,” a Starling spokesperson said.

Starling did not share any details on its acquisition targets. However, UKTN understands that Starling has £400m in surplus capital on its balance sheet that could be used for acquisitions.

A source told UKTN that Starling is looking at targets in the lending space. Starling has previously been linked with mortgage lender Kensington, with the challenger bank reportedly in a bidding war with high street bank Barclays.

However, this deal is not finalised and UKTN understands that Starling is keeping other mortgage lenders on the table.

Starling has previously acquired UK-based buy-to-let mortgage lender Fleet Mortgages in a £50m cash and stock deal.

Founded in 2014 by Anne Boden, Starling provides personal and business accounts, along with B2B banking and payments services through its banking-as-a-service model.

Last year Starling raised a total of £322m, with £272m of that coming in a Series D funding round in March. That investment gave the bank unicorn status – privately held companies valued at $1bn or more.

Boden has previously said that the fintech company is aiming to go public by 2023.

Starling has been profitable on a monthly basis since October 2020 and last year saw its revenues soar by 600%.