Recently, a rapidly-growing digital lender to small enterprises got valued at $2.3 billion after culminating a $100 million fundraising round. The exercise was geared towards aiding in the licensing of the company’s artificial intelligence (AI) loan system, particularly to other banking institutions outside the United Kingdom (UK).
The fundraising serves as a representation of how valuations of European fintech entities have increased in the recent months. This situation is owed to the increasing conviction among investors that digital disruption would revolutionize the financial sector as it has done other with sectors including media and retail.
Acorn OakNorth Holdings, which since the beginning of 2018 has more than doubled its loan book to more than $2.2 billion, raised money from both existing and new investors. Some of them include EDBI and GIC, which are state-backed funds in Singapore. What ’s more, the Dutch bank NIBC joined the list of new investors in Acorn OakNorth Holdings.
The fundraising is said to have valued Acorn OakNorth at 170 times its £10.6million pre-tax profits announced last year. As such, the British digital lender currently prides itself on being among the most highly valued new fintech start-ups in Britain, has emerged to challenge the dominant retail banks in the country.
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The CEO and co-founder of Acorn OakNorth Rishi Khosla said that the funds raised would be utilized in building its regulatory capital. This move is propelled by the need to support its increasingly expanding loan book as well as the expansion of its licensing operations, primarily for its artificial loan evaluation software located outside the United Kingdom.
Rishi told the Financial Times that his company might think of an initial public offering in the future, especially if its fast growth translates to the need to secure additional capital in the future. In fact, he said: “public markets do offer good access to capital.”
In a different announcement, Monese, a British-based fintech, said that it had secured $60 million in a fundraising round led by the Swedish family-controlled investment group Kinnevik. The group boasts one of the renowned names in European technology. Some of the investors in Monese include International Airlines Group and PayPal.
Since securing its UK banking license back in 2015, Acorn OakNorth has lent over $2.8 billion to more than 300 British companies. Furthermore, its automated lending tool suggests a customized loan package for a company by crunching about 100 private and public sources of data.
Aside from that, the company ’s advisory board consists of the Bank of England ’s ex-head of new banks Nick Lee, City grandee Adair Turner, and Francis Maude, the former Conservative party chairman.
Acorn OakNorth has nearly 300 staff, whereby 14 of them are customer-facing loan arrangers. Mr. Khosla said: “doing that level of lending with 14 client-facing people is almost unheard of. You would normally have 10-times the number of credit assessment people for that volume of loans.”
Furthermore, the British lender has licensed its automated lending system to more than 10 other lenders in various parts of the world including Asia, Europe, and the US.
Source FT
