The UK has a new unicorn as OakNorth’s valuation tops $1bn.
OakNorth, a challenger bank focussed on lending to high growth businesses and property developers, has raised £154m in equity money in a round that values the company at £934m (approximately $1.3bn). The fundraise pushes the firm into “unicorn” territory – a term reserved for private tech firms with a valuation north of a billion dollars.
The money comes from The Clermont Group, Toscafund and Coltrane, which together have purchased a 16 per cent stake in the challenger bank. OakNorth says the money will be used to boost its lending by an additional £1.5bn.
The challenger bank has grown its loan book to over £800m since launching in late 2015, and makes great play of its technology underwriting capabilities. Its ACORN data and technology platform uses machine learning to extract relevant data from millions of data points on prospective borrowers, which are pulled via cloud-based technology.
The ACORN platform will now be made available for licencing by lenders in other geographies, allowing them to slicken their own origination and underwriting capabilities.
“Rather than building a technology platform and then going to market trying to sell it, we wanted to build the platform and prove the concept in a highly regulated and highly competitive market – the UK – via OakNorth,” explained Rishi Khosla (pictured), CEO and co-founder of OakNorth. “Through ACORN we will be able to help lenders around the world unlock the underserved and underestimated market for bespoke loans to SMEs.”
OakNorth said in a press release that its loans have so far contributed to the creation of over 3,000 new homes and 2,000 new jobs in the UK. Over 150 businesses have taken a loan from the challenger to date, but Khosla says this represents “just a fraction of the businesses that need financing support”.
