Goldman invests £50m in UK digital bank Starling
Start-up lender aims to boost growth ahead of targeted initial public offering
Goldman Sachs has invested £50m in UK digital bank Starling, as the start-up looks to ramp up growth and bring in significant investors ahead of an eventual initial public offering.
Starling said on Monday that the cash injection would be treated as an “extension” of the £272m funding round it announced last month, which valued the company at about £1.1bn.
The investment by the Wall Street bank — which has been working on its own digital retail offering — follows speculation last year that Starling could be a takeover target and had attracted interest from rivals such as JPMorgan.
However, Starling’s chief executive Anne Boden has repeatedly said that she intended to take the bank public. Two people briefed on Monday’s deal stressed it was a financial investment through Goldman’s asset management arm, rather than a strategic investment.
One of the people added that Starling was targeting an initial public offering in late 2022 or early 2023.
Starling has been profitable on a monthly basis since late last year, but may need to raise further capital before its IPO depending on the pace at which it expands its loan book.
The company had only carried out a small amount of lending before the coronavirus pandemic hit last year, but has since lent out more than £2bn to small businesses through government-backed rescue loan schemes.
Boden said on Monday: “Securing the support of another global financial heavyweight demonstrates the strength of demand from investors and represents yet another vote of confidence in Starling. Goldman Sachs will bring valuable insight as we continue with the expansion of lending in the UK, as well as our European expansion and anticipated M&A.”
Goldman opened its consumer-focused brand Marcus in the UK in 2018. The UK business has so far only offered savings accounts, meaning it does not directly compete with Starling. However, Goldman has made building out its consumer arm a key part of its long-term strategy.
James Hayward, Goldman Sachs’ managing director, said: “Starling is one of the leading and most innovative digital banks in the UK, with an ambitious technology-first leadership team and addressing a deep market opportunity. We are delighted to be supporting their growth with this investment and believe the company has sustainable long-term earnings potential.”