The digital bank is hoping to secure an injection of capital from existing investors.
Durham-based Atom bank is on the hunt for £40m in additional cash to grow its business over the next year or so.
The digital bank said it has not yet completed the raise, but that the fresh capital would come from existing investors and will be used to help support its mortgages and business lending, with an IPO now on the cards for 2022.
“Despite it being a difficult environment for all companies that need to raise funding, this capital raise will allow us to continue to progress towards profitability and ever-improving levels of efficiency and engagement,” said Atom CEO Mark Mullen, speaking about the possibility of listing next year.
“The team retains an IPO as our objective and we’ll take the business there when we and the markets are ready. After the year that’s just gone I’m not going to claim perfect foresight, but we’re looking at the financial year 2022/23 as our IPO target.”
Despite announcing the raise, Atom has yet to seal the deal on the fundraise, with early reports of a £150m funding round last year clearly having been downsized.
To date, Atom has raised around £450m and has even flirted with the idea of a BBVA takeover before the Spanish bank pulled out of the deal as it pivoted away from fintech.
The digital bank also raised cash from the doomed Woodford Patient Capital Trust, with Neil Woodford’s fund most recently taking part in Atom’s fundraise in July 2019. Woodford Patient Capital Trust ceased operations just three months later before being taken over by Schroders.
Aside from a rocky road to raising cash, Atom has had a strong 12 months.
In the second half of the current financial year, Atom Bank has added £362m of mortgages to its portfolio and has loaned a total of £2.8bn to its mortgage customers since 2016.
The digital challenger also opened its Instant Saver account to the public in September last year and has already seen deposits reach £600m, adding to the £1.7bn held in its fixed savings rate accounts.