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Fintech Atom has taken a valuation hit after raising more than £100mn from existing investors as the sector grapples with higher interest rates and weaker investor sentiment.
The digital bank raised the equity from Spanish bank BBVA, private equity firm Toscafund and London-based Infinity Investment Partners, three of its longstanding shareholders.
A person close to the company said the funding round valued the challenger bank at £362mn, down from a previously reported £435mn at the start of last year.
The valuation cut is the latest sign of how weakening investor sentiment and rising interest rates have compressed fintech valuations. Venture capital investment has slowed as borrowing costs have risen and investors have increasingly prioritised profitability over growth.
Atom, which had about 224,000 customers at the end of its latest financial year in March, last year reported a pre-tax loss of £10mn.
The lender said the latest capital raise would allow it to grow its balance sheet and compete with high-street banks and other digital challengers in the savings, business lending and mortgage markets.
Atom, which is headquartered in Durham, said the fundraising was likely to be its last capital raise in private markets as it prepares to float on the London Stock Exchange. The challenger bank was forced to delay its initial public offering last year because of the difficult market for IPOs.
A series of public listings have fallen short of investor expectations in recent months. Shares in London’s CAB Payments, another fintech, fell 72 per cent last week after it cut its revenue forecast just three months after listing.
Atom’s chief executive Mark Mullen said he was “delighted” with the vote of confidence from the company’s investors.
“This money will be put to work to drive growth and to fuel the development of our franchise . . . Our vision remains as valid today as it was when we founded the company,” he added.
Atom launched in 2016 and was one of the first app-based banks in the UK. But it has struggled to grow as fast as some of its digital competitors.
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