The world’s biggest technology investment engine is buying a stake in Zopa, the British fintech which has revived its fortunes after a torrid period in which it nearly lost its banking licence.
Sky News has learnt that SoftBank’s Vision Fund II is leading a funding round that will see more than £100m of new capital injected into Zopa.
The fundraising, which is likely to be announced next week, is expected to be the peer-to-peer lender and digital bank’s last big fundraising ahead of a planned public flotation towards the end of next year.
A number of other investors are expected to participate in the round, which will value Zopa at in excess of £500m ($684m), according to one shareholder.
The deal will add Zopa to a growing stable of European fintechs which have been backed by SoftBank’s two Vision Funds.
In the UK, it holds stakes in Oaknorth and Revolut, the latter having received Vision Fund money in a round which made it Britain’s most valuable tech company.
SoftBank has also backed Klarna, the Buy Now, Pay Later platform which is Europe’s most richly valued fintech.
Zopa’s new valuation will represent a significant turnaround for its management team, led by chief executive Jaidev Janardana, and puts it on track to become Britain’s latest technology ‘unicorn’ when it goes public.
Zopa was founded in 2004 and became a pioneer in the burgeoning peer-to-peer sector, raising tens of millions of pounds from investors to expand its business.
It experienced a rocky period in 2019, however, and was forced to scramble to raise £140m in order to avoid losing its fledgling banking licence.
New investors in that round were led by IAG Capital Partners, a US-based private investment firm, while it has also been backed by existing long-term shareholders such as the listed group Augmentum Fintech.
Notwithstanding the rebound in its valuation, Zopa’s improved performance has not been entirely trouble-free: The Times reported last week that the fintech had been hit by a nine-day IT outage which had left investors unable to withdraw funds.
JP Morgan has advised Zopa on its latest funding injection, which comes seven months after existing shareholders injected £20m into it to help accelerate the expansion of its banking arm.
The identity of any other new investors was unclear on Thursday.
According to Zopa, it has already become one of the UK’s top ten credit card issuers, attracting more than 100,000 customers in a nine month period.
It said earlier this year that it had also seen strong demand for personal loans and car finance products, while drawing more than £400m in customer deposits.
Zopa added that its bank was on track to reach profitability by the end of the year, making it among the fastest challenger banks to reach this milestone.
“We look forward to using the momentum that we have gained to expand our products and services further and to help more customers,” Mr Janardana said this year.
“Our trajectory puts us on course to be amongst the fastest digital banks to achieve profitability [and] we will continue to build from that base with an IPO [initial public offering] on the horizon as early as Q4 2022.”
SoftBank and Zopa declined to comment.