Zopa looks set to raise around £70m at a valuation of over half a billion pounds.
Rarely is there smoke without fire. Sky News reports that Zopa is in talks with JPMorgan to raise roughly £70m in equity money via the sale of new shares. If the round comes to fruition, it will be the first time that Zopa has raised money since early 2014 – when the platform secured a £15m investment from Arrowgrass Capital. Sky’s Mark Kleinman implies that the £70m round will carry a valuation of over £500m. A number of new and existing investors are likely to participate in the fundraise alongside JPMorgan. We know that Nigel Morris of QED Investors joined the Zopa board as a Non-Executive Director towards the end of October as part of an equity investment, so it wouldn’t be a surprise to see QED ultimately appear on the list of participants in the £70m round.
Only last week we learnt that JPMorgan had inked a landmark deal with the small business lending platform OnDeck. The two will collaborate on a pilot lending project, set to launch in January, which will involve JPMorgan lending money to its c. 4 million small business customers via the OnDeck platform. Now it would appear that the JPM – the largest US bank in terms of deposits – is to become a significant force within the UK’s peer-to-peer lending sector. Zopa launched way back in 2005 as the world’s first peer-to-peer lending platform. £1.2bn has been lent via the platform to date, according to the Liberum AltFi Volume Index UK.
Zopa representatives have declined to comment on the fundraise. But if peer-to-peer lending history tells us anything, it’s that these news leakages seldom remain unsubstantiated for long. Funding Circle, for example, last raised equity money in April, pulling in $150m in a round led by DST Global. The Sunday Times first got wind of the deal in March, and Funding Circle at that time refused to comment. The round, incidentally, was said to have made a “Unicorn” out of the Funding Circle platform – a private tech company with a valuation upwards of $1bn. If Zopa’s £70m fundraise does indeed carry a valuation of over £500m, then the company will be well on its way to joining the club.
The fundraise – should it materialise – is yet another sign that Zopa is now firmly locked into growth mode, after years of carefully building up a sustainable business. Recently appointed CEO Jaidev Janardana appears to be orchestrating the scale-up, having steered Zopa into new lending niches, opened up the loan book to significant amounts of institutional capital, and now, it would appear, secured the UK peer-to-peer lending sector’s second largest equity investment to date.
AltFi is returning to Amsterdam for its second annual Summit in the city. The inaugural event last year was a roaring success, with key figures from across Continental Europe's alternative finance and digital banking sectors highlighted. These included Jeroen Broekema, managing director of Funding Circle Netherlands, and Mieke van Engelen, head of innovative partnerships at ABN AMRO's standalone lending platform, New10.