Perenna will be using its new cash to bring s long-term fixed rate mortgages products, funded through covered bonds to the UK market
Perenna, a neobank that launched in 2020 to upend the vast mortgage market, has raised a $52m funding round.
The round, which is composed of all equity capital, was led by Silverstripe - a backer of rival Zopa - and an existing strategic investor in Perenna who led its last $30m round back in September 2022.
It brings Perenna’s total funding to $90m and follows its recent approval of a UK banking licence from the FCA and PRA.
“This successful fundraise, set against the backdrop of a challenging fundraising market is a clear testament to the strength of our unique approach and the significant opportunity to reimagine the structure of the UK mortgage market,” Arjan Verbeek, CEO and co-founder of Perenna said.
“With over £3tn of investor monies having no efficient access to the UK mortgage market, our covered bond platform will unlock this, enabling them to generate sustainable risk-adjusted returns whilst also delivering better outcomes for homeowners across the country," he added.
Following the round, Perenna will roll out its long-term fixed-rate mortgage products, funded through a covered bond model that it says is the first of its kind in the UK.
The covered bond funding model means Perenna will not have to rely on retail deposits to fund lending, but instead raise the cash through the sale of the securities to pension funds and other institutions.
The 20-30 year fixed rate products have a 5,000-person strong waitlist who will be invited to apply over the coming weeks with a wider public later this year.
“The UK is a clear outlier when compared to other advanced economies like the US and Denmark. The market is in dire need of reform at a time when homeowners are battling a range of challenges, whether that be first-time buyer affordability, those remortgaging in a higher rate environment or those looking for greater choice and flexibility in later life,” Hamish Peacocke, CCO and co-founder of Perenna said.
“Our unique covered bond funding model can play a huge part in this reform. By establishing a funding platform like ours, there’s a huge opportunity for us to transform other international markets where similar structural problems exist. The UK is the perfect first step,” he added.