Starling Bank, the online-only fintech start-up, could be the first of the new generation of digital banks to be snapped up by a traditional rival, with Lloyds and JP Morgan rumoured to be eyeing bids. It would be the first big merger of its kind in the UK, between an established lender and fintech start-up.
The USA’s largest bank, JP Morgan is preparing to launch its first consumer-facing bank in the UK sometime in the new year. It is understood to have held preliminary discussions with Starling. An acquisition would be attractive in that it would give JP Morgan 1.9 million UK-based account holders at launch, as well as interest in acquiring the start-up’s technology.
Starling has also recently opened a data room as part of a drive to raise £200 million in fresh funding. That plan may well still go ahead as it is far from certain Starling would be open to being acquired. Chief executive Anne Boden has long stated the ambition for Starling Bank to become a public company and a London IPO at some point over the next couple of years cannot be ruled out.
However, while Ms Boden and Starling’s management team may be personally inclined to keep striving towards establishing the online-only bank as a stand-alone business able to rival traditional lenders, its biggest investors may be keener to cash in. Merian Global Investors and Harry McPike are the fintech’s two largest shareholders.
The latter is something of an enigma. Despite the name, Mr McPike is a Swiss-born Austrian that now lives in the Bahamas. He made his fortune first as a professional Black Jack player and then in trading financial markets. He is believed to have backed Starling with an investment of around £100 million.
To date, Starling has raised around £363 million of investment capital. As a private company, it has kept its valuation during funding rounds a closely guarded secret. But it is believed to have been valued at over £1 billion at the time of its most recent raise.
Ms Boden founded Starling and launched the online-only bank in 2017. Unlike most other fintech banks, Starling is now in profit, announcing an October profit of £800,000. Customer numbers were boosted over the summer after it was accredited as a lender of government-backed ‘bounce back’ and coronavirus ‘business interruption’ loans.
A Starling spokesperson commented on the rumours: “Anne has always said she will never sell to a big bank. An IPO is still in our sights.”
A fairly definitive position, but one that could be compromised if major investors have other ideas. JP Morgan and Lloyds both declined to comment on the rumour.
This article is for information purposes only.
Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.