The UK’s newest unicorn proves hot property for GIC, one of the world’s largest sovereign wealth funds.
Challenger bank OakNorth entered into the UK’s stable of unicorns in October when it raised £154m. For the uninitiated, a unicorn is a private tech firm with a valuation north of a billion dollars.
The £154m round valued OakNorth at £934m (approximately $1.3bn). The money came from three investors, The Clermont Group, Toscafund and Coltrane, which collectively took a 16 per cent stake in the company. Today, the trio has been joined by a fourth investor: GIC, Singapore’s sovereign wealth fund.
With well over $100bn in assets under management, GIC is one of the world’s biggest sovereign wealth funds. The fund has piled into the fundraising round with another £90m, giving it a little under a 10 per cent stake in the challenger bank, and bringing the size of the fundraise to £244m.
OakNorth is a pretty traditional-looking fintech, if indeed it can be called a fintech at all. The company makes loans of up to £25m to high growth UK businesses and property developers. It has rapidly grown its loanbook to over £900m since launching in late 2015, with a client base which includes Leon, Gallidard Homes and Brasserie Blanc.
The bank’s 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 is also available for licencing by lenders in other geographies, allowing them to slicken their own origination and underwriting capabilities.
In a press release, GIC was said to have been “particularly attracted” by the growth potential of ACORN, and will assist with its expansion in the US, Europe and Asia.
“The transaction is due to close in mid-November and GIC will assist in ACORN’s global expansion, ensuring that banks and lending institutions around the world are able to originate, underwrite, monitor, and book bespoke SME loans faster, more efficiently and with more rigour,” explained Rishi Khosla (pictured), CEO and co-founder of OakNorth.
Khosla further explained that, while there was no immediate need for extra capital, OakNorth was keen on an adding an investor with the scale and global perspective possessed by GIC.
“When we became aware that GIC was interested in investing, there was a collective view that it would be hugely beneficial to the company if they did, so Indiabulls agreed to sell just under 10 percent of their stake,” he explained.
