Starling Eyes M&A valued at £ 1.1bn in a £ 272m financing round

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The Starling bank card. Photo: Starling

British digital bank Starling has raised £ 272 million ($ 376 million) from donors such as Fidelity and the Qatar State Fund.

Starling said Monday that Fidelity led its “Series D” funding round, which included cash from the Qatar Investment Authority, UK railroad pension fund and Millennium Management hedge fund. Starling was valued at £ 1.1 billion as part of the deal. The transaction still requires regulatory approval.

“Digital banking has reached a turning point,” said Starlings founder and managing director Anne Boden in a statement. “Customers now expect a fairer, smarter, and more humane alternative to the banks of the past, and that’s what we offer them at Starling as we continue to grow and add new products and services.

“Our new investors will bring a wealth of experience as we move into the next phase of growth, while the continued support from our existing funders is a great show of confidence.”

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Starling said the new funds would be used to boost lending in the UK, fuel expansion into Europe and potential M&A opportunities.

Starling was founded in 2014 as one of the first all-digital banks in the UK. The company was designed entirely around the smartphone and lets customers do everything digitally, from opening an account to applying for a loan.

Today the bank has over 2 million customers, including 300,000 business account holders. Thanks to participation in government-supported loan programs for business development, the loan portfolio has grown rapidly in the last year. The bank has customer deposits of £ 5.4 billion and has lent over £ 2 billion.

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Starling has released a trading update alongside its funding announcement. The bank said it was on track to report its first full year of profitability after four straight months in the black. Net income is £ 1.5 million a month, according to the bank, and sales increased 400% year over year in January.

In a separate announcement on Monday, rival digital-only bank Atom said the value of corporate loans on its balance sheet had tripled to £ 700 million in the past 12 months. The bank credited participation in the state’s coronavirus credit program (CBILs). Atom said it hopes to participate in the successor to the CBILs announced in last week’s budget, the Recovery Loan Scheme.

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