Atom Bank, the Durham-based online-only fintech challenger bank, has been valued at £435 million in an investment round expected to be the last before it launches an IPO and lists publicly on the London Stock Exchange. The funds were raised from Atom Bank’s two largest existing shareholders, the Spanish banking group BBVA and Toscafund, the British investment manager.
The round has also now been opened to other existing investors as the bank edges towards profitability. Mark Mullen, the fintech’s chief executive, also announced a public offering is currently considered likely next year, adding:
“The next time we do anything in terms of raising money, it’ll likely be through an IPO process. You can never absolutely guarantee it, but that’s the plan.”
Atom Bank has raised a total of £500 million since it was set up in 2013. While that currently represents a paper loss for early investors, it is a vast improvement on the £300 million valuation the bank was forced to accept while raising funds last year. The highest valuation it has raised funds at was £555 million in 2019.
The Bank, which has no branches, focuses on savings accounts, mortgages and business loans rather than current accounts like other British fintech banking start-ups like Monzo and Starling Bank. It employs 470 staff across management, technology and customer service roles. While it has been loss-making since opening for business in 2016 it says it is currently moving into profitability.
Mr Mullen announced today that Atom had achieved its first quarterly operating profit over the three months to the end of December. The current quarter to the end of March is expected to result in a small loss but the fintech’s boss said it expects to be profitable over the entirety of 2023.
The funds raised during the current funding round will be used as growth capital and boost the online bank’s regulatory capital moat. It will also allow it to invest in new products and services.
The fintech has also embarked upon an experimental new working week with staff starting a 4-day week with no loss of salary from November last year. While many companies have adapted working models since the onset of the Covid-19 pandemic, few have gone as far as implementing a shorter working week. However, Mr Mullen enthused that it was “going extremely well”.
Since implanting the 4-day week Atom Bank has seen improvements in the number of days lost to sickness as well as in employee retention. So far there has been no slide in the company’s key performance indicators to offset those gains. Initially a three month trial, Atom has extended that by another three to the end of April. Mullen commented:
“Right now, we would be struggling to point to a KPI [key performance indicator] that was going south.We’ve not changed anything yet [officially extending the arrangement again or confirming it as permanent]I’m just not seeing any reason why we wouldn’t continue to pursue this.”
