Atom Bank valued at £435mn as it targets market listing next year

UK digital lender Atom Bank has been valued at £435mn after raising more than £75mn from existing investors, as the bank seeks to expand its business ahead of a potential market listing next year.

The fundraising was led by Spanish financial services group BBVA, which has a 39 per cent stake in the business, alongside London-based investment firms Toscafund and Infinity Investment Partners.

App-based bank Atom announced the funding as it reported its first quarterly profit last year and said it was on target to post its first full year’s profitability in 2023.

“We have an appetite to grow and now we have the capital and funding to enable us to do it,” said chief executive Mark Mullen. “With improving interest rates for banks, the asset business becomes a more and more competitive model, so we’re very optimistic.”

From April 1 2021 to the end of the year, Atom increased total customer deposits by 16 per cent to £2.5bn compared with its full financial year to March 31 2021.

Atom said that mortgage and business loans had grown 30 per cent over the past nine months, with applications for digital loans peaking at £315mn in the three months to December 31 2021.

Mullen said he aimed to increase this by an additional £2bn by 2023 through offering better savings accounts than rivals, which he criticised for failing to pass on interest rate rises to savers.

While Atom was targeting a stock market listing next year, Mullen said the company was trying to pick the ideal moment based on both its own performance and the wider economy.

Atom, which launched in 2016, reported a pre-tax loss of £62mn for the 12 months to March 31 2021, compared with a £66mn pre-tax loss in 2020.

Atom’s financing comes after soaring valuations for other UK so-called neobanks, including Monzo which was valued at $4.5bn in December in a funding round with investors including Chinese tech group Tencent.

Digital bank Revolut became the UK’s most valuable private tech company last July with a valuation of $33bn, before being eclipsed by London-based payments group Checkout.com, which in January was valued at $40bn after a $1bn funding round.

Mullen said that he was optimistic that Atom could secure a higher valuation. Atom had been valued at £530mn in 2019 after a £50mn fundraise with investors including the now collapsed fund of Neil Woodford, which had been among its biggest backers.

To date Atom, which last year moved the majority of its 430 employees to a four-day working week without affecting salaries, has raised roughly £500mn.

In November, Atom announced a £500mn deal with mortgage lender Landbay as it sought to return to the market having left it temporarily because of the Covid-19 pandemic.

“What’s been remarkable is both the inflation [of] house prices but equally the level of competition especially in the last three or four months,” said Mullen.