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Zopa raises £75m but says it won’t rush to IPO

Zopa London IPO
Image credit: Zopa

Challenger bank Zopa has landed £75m in capital from existing investors and predicts it will reach full-year profitability this year as it eyes a London IPO once public markets have settled.

IAG Silverstripe led the £75m round, with further investment coming from Augmentum Fintech and Davidson Kempner Capital Management LP. No contribution was made by earlier investor SoftBank.

Jaidev Janardana, CEO of Zopa, said: “We are happy to have investors who share our excitement at the opportunity to serve more customers across more product categories. This has already led to several profitable months in 2022 and will very likely convert into full-year profitability in 2023 for the first time.”

Digital bank Zopa, which provides financing and savings accounts, became profitable for the first time in April last year just 21 months after being granted a full UK banking licence.

Funds will be put towards Zopa’s “growing balance sheet” and “M&A dealmaking” “as early as this quarter”.

“Zopa takes an agile and dynamic approach to credit risk which means it has continued to lend responsibly in a changing environment,” added Janardana.

“As a result, our business remains resilient with record loan origination volumes, stable credit performance comparable to pre-pandemic levels, and continued innovation.”

Zopa eyes London IPO

The extra cash, along with an expectation to reach profitability this year, means Zopa is edging closer to a public market debut after previously putting plans on pause.

A spokesperson for Zopa told UKTN: “We still plan to IPO. As we have said before, Zopa could have been ready for an IPO as early as Q4 2022 by which time we would have shown a consistent track record of profitability.”

The spokesperson said a London listing was on the cards, where “profitability” and “strong unit economics” are sought after by investors.

“But we will not be rushed to make a hasty decision and will carefully evaluate the investment climate when markets reopen.”