Zilch warns it might ‘go somewhere else’ unless UK boosts IPO market

Zilch has warned it could list abroad without UK government measures to boost capital markets and investment in tech companies, as the fintech edges closer to an initial public offering.

Chief executive Philip Belamant said the eBay-backed payments company with 4mn customers was waiting to see policies aimed at fostering “liquidity and excitement around IPOs” in the UK before committing to a London listing.

Zilch on Wednesday secured £100mn in securitised debt financing from Deutsche Bank, which the consumer credit company said was a “precursor” to a listing.

Belamant, however, said that Zilch was waiting to see “pension funds investing in high-growth British companies” and “incentives for retail investors to buy and hold British stocks”.

“If this all happens, I’m not sure why you wouldn’t want to list on the LSE . . . But of course, if it doesn’t happen, then we have to take the appropriate decision and that might be to go somewhere else.”

The comments are the latest warnings on the attractiveness of the London stock market ahead of UK general elections on July 4. The UK has suffered delistings to the US and a dearth of new listings in the aftermath of the pandemic due to rising interest rates and choppy markets and widening valuation gap with US markets.

While there has been a modest revival of activity — with British microcomputer maker Raspberry Pi going public last week — the UK has lagged other European exchanges when it comes to IPOs this year.

The UK government last year announced the so-called Mansion House reforms aimed at boosting the London stock market by unlocking an additional £75bn from defined contribution pensions, a common type of workplace retirement benefit, and local government pensions.

Belamant welcomed the progress made by LSE chief executive Julia Hoggett and said that conversations with both the Labour and Conservative parties had positively centred around growth for the technology sector.

Zilch said the latest financing deal would help it grow in the UK and expand into new business lines, including travel booking and foreign exchange.

The fintech offers a cashback debit card and zero-interest loans. It makes money from targeted advertising based on its transaction data which it uses to smooth the cost of credit for consumers. Backers of the four-year-old company valued at $2bn include Goldman Sachs and DMG Ventures, the investment arm of the Daily Mail.

“We’re actually an ad platform that’s built a credit proposition on top of it,” said Belamant. “On a Tuesday, we know that a particular customer always shops at Sainsbury’s. We can go and take that data with the customer’s affordability and open a line of credit available to them.”

Earlier this year, Zilch said it would pause its US rollout to focus on profitability in the UK, voiding the pre-registrations of about 150,000 customers. The company has partnered with New Jersey bank Cross River which last year received a rebuke from the Federal Deposit Insurance Corporation over “unsafe and unsound banking practices”.

This article has been amended to make clear Julia Hoggett is chief executive of the LSE, not LSEG as previously stated