UK-based Atom Bank has announced that it raised GBP 100 million in new equity supported by three of its longstanding shareholders. The digital bank raised the equity funds from Spanish bank BBVA, private equity firm Toscafund, and Infinity Investment Partners.

According to people familiar with the matter, even if the funding round now values the bank at GBP 362 million, this is a significant decrease from a previously reported GBP 435 million from the beginning of 2022. The valuation reduction was influenced by the rising interest rates and declining investor sentiments that have compressed overall fintech valuations. Venture capital investment significantly slowed as borrowing costs rose and investors started to prioritise profitability over expansion and growth. Atom is not the only fintech that was affected by this, as Klarna, a Sweden-based Buy Now, Pay Later company, had its valuation lowered from GBP 37 billion to GBP 5.5 billion when it raised GBP 657 in new equity.

Atom’s response to the capital raise According to officials, the recent capital raise intends to allow Atom to grow its balance sheet and compete with other banks and digital participants in the savings, business lending, and mortgage markets. Moreover, representatives project that the fundraising to be the company’s last in the private markets before it migrates to the London Stock Exchange. However, the bank didn’t confirm a target date for an upcoming public listing, considering the current geopolitical situation and the collapse of Silicon Valley Bank and Credit Suisse earlier in 2023.

The digital bank delayed its initial public offering in 2022 due to the difficult market for IPOs. Atom is still working on its maturity, stability, and predictability to be able to go public, requiring a series of quarterly performance updates that offer investors confidence that the bank is in control and can be dependent upon. More information about Atom When it launched in 2016, Atom was one of the first app-based banks in the UK, as well as the country’s first digital-only bank to be granted a regulatory licence.

The bank provides a suite of services on its app, including savings, mortgages, and business loans, among others. To secure its app, Atom enables customers to use their device security to maintain their accounts safe. Customers can leverage features such as iOS Touch ID or Face ID, and Android Fingerprint to log in.

As an alternative, customers can use the in-app biometric security features and passcode. Recently, Atom partnered with climate tech company Kamma to address the risk of climate change. The collaboration allows Kamma to provide analytics on Atom’s financed emissions, PCAF scoring, and climate credentials on pools of assets for securitisation. Moreover, Kamma’s services intend to offer Atom Bank guidance supporting risk management, regulatory reporting, and green asset qualification.

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