British digital financial institution Starling is valued at $ 1.5 billion after assist from Constancy

The Starling Bank Banking App on a smartphone.

Adrian Dennis | AFP via Getty Images

LONDON – Starling Bank, a UK-only digital challenger bank, announced Monday that it has raised £ 272 million ($ 376 million) in an investment round.

The new cash injection, led by Fidelity Investments, values ​​Starling at £ 1.1 billion or $ 1.5 billion. That makes it one of Europe’s unicorn companies – private companies valued at $ 1 billion or more.

Qatar’s sovereign wealth fund, the Qatar Investment Authority, also invested in Starling, along with UK pension scheme Railpen and hedge fund Millennium Management.

“Digital banking has reached a turning point,” said Anne Boden, CEO of Starling, in a statement on Monday. “Customers now expect a fairer, smarter and more humane alternative to the banks of the past, and that’s exactly what we at Starling offer them as we continue to grow and add new products and services.”

Boden added, “Our new investors will bring a wealth of experience as we move into the next phase of growth, while the continued support of our existing backers represents a great vote of confidence.”

Starling said it would use the money to expand into Europe and anticipate mergers and acquisitions. The company resumed talks to secure a banking license in Ireland last year after initially suspending international expansion plans due to the coronavirus pandemic. Meanwhile, Boden has already expressed an interest in buying from a competing lender.

“We’ll probably buy something in 2021,” Boden said in an interview last year. “A lot of lenders are reevaluating their futures and we’re growing very, very quickly. We’re always looking for opportunities.”

Boden denied a report claiming JPMorgan and Barclays showed interest in buying Starling. She previously stated that the start-up would aim to go public.

Starling is one of the most famous digital banks in Europe. Founded in 2014 by Boden, a former bank employee, it has attracted 2 million users and now accounts for 5% of the UK small business market with 300,000 small business customers.

While domestic rival Monzo has faltered and its rating has dropped 40% over the past year due to the coronavirus pandemic, Starling has managed to achieve something that many fintechs have struggled with: achieving profitability. The company posted a profit of £ 800,000 in October and says it has been consistently profitable since then. Net income now exceeds £ 1.5m per month. The company says it is now on track to report its first full year of profit.

Starling received a big boost from the UK’s coronavirus lending systems and became one of several fintech companies offering government-supported loans to companies during the pandemic. It now has gross borrowings of over £ 2 billion and deposits of £ 5.4 billion.