Starling bags £130.5m from existing investors to build "war chest" for acquisitions

Starling Bank has raised £130.5m from its existing investor base, as it looks to build a “war chest” for acquisitions.

The challenger bank said that the £130.5m fundraise, announced today, gives Starling a pre-money valuation of more than £2.5bn.

"This will enable us to continue our growth and to build a war chest for acquisitions. We are looking at a number of potential targets," a spokesperson said.

Starling did not reveal any further details about possible acquisition targets.

Existing investors who participated in the round include Starling’s biggest backer Harald McPike, the Bahamas-based media-shy investor who is thought to own just under 40 per cent of Starling.

Current investors Fidelity Management and Research Company, RPMI Railpen, Qatar Investment Authority and Goldman Sachs were also amongst those taking part in the round.

One fintech source said the benefit of undertaking an “internal fundraise” was it was a “quick” and “easy” way of raising funds, without having to make the business case to new investors.

The source said it was a “vote of confidence” in Starling.

In March last year, Starling snagged a blockbuster £272m funding round, giving it a valuation of £1.1bn and elevating it to unicorn status.

In July last year, Starling shelled out £50m acquiring specialist buy-to-let mortgage lender Fleet Mortgages, its first acquisition that also marked its entry into the property-lending sector.

The challenger bank said the acquisition was “part of a wider plan to expand lending” and targeted M&A activity.