Financial technology company Zopa has raised £140m, just in the nick of time to meet a key requirement of its provisional banking license.
Zopa announced on Tuesday it had secured the investment from IAG Capital, a US investment group that first backed the online lender in 2018.
The cash injection will see IAG take a controlling stake in the business and the deal must still be approved by regulators.
The Times reported on Monday that Zopa was racing to finalise the deal in order to meet capital requirements mandated under Zopa’s provisional banking licence, which was granted last year. Tuesday marked the deadline to secure the funds.
“This new funding means we have concluded the fundraising phase of our bank mobilisation,” Zopa CEO Jaidev Janardand said in a statement.
“Definitive agreements to provide the funding have been finalised and are subject to final approvals including regulatory change of control.
“We continue to hold our bank licence with restrictions and are working closely with the regulators to gain our full licence. We are excited that that once approved, Zopa will be able to launch its bank alongside its peer-to-peer business and offer a broader set of products to our customers.”
Zopa was founded in 2005 as one of the first peer-to-peer lending businesses, connecting borrowers directly with investors willing to lend online. The company has facilitated over £5bn in unsecured personal loans over its platform.
Zopa first announced plans to launch a full bank alongside its peer-to-peer operation in 2016 and has been working on the project ever since. The company made a profit of £984,000 on revenues of £47.5m last year, according to recently filed accounts.