UK challenger bank Atom has raised more than £75 million in new equity priced at 70p per share as it continues to grow its profitability and drive toward an initial public offering (IPO).
BBVA and Toscafund led the equity fundraise with co-investor Infinity Investment Partners. Aton is now opening the round to other existing shareholders.
Atom has now raised more than £115 million in the last 12 months, attracting the interest of investors with positive progress across its product portfolio.
The digital-only bank launched in 2016 and offers saving accounts, secured business lending, and automated mobile mortgages.
Its lending products prospered in the last nine months, with both mortgage and business loans growing by 30%. In 2021, Atom passed £3 billion of mortgage completions, with applications for its digital loans peaking at £315 million in Q3.
The challenger bank’s on-balance sheet lending to small businesses also surpassed £1 billion during 2021.
Fuelled by the quality of its lending and a steady reduction in the bank’s cost of funds, margins and revenues have also continued to grow.
Year to date, Atom’s interest margin has risen to 1.28% versus 0.51% in the 2021 financial year. The bank delivered its first monthly operating profit during Q2 and has continued to grow its revenues throughout the year while maintaining a tight control on its costs.
It is a similar story in the bank’s savings products. Last year saw total customer deposits grow by 16% to £2.5 billion, with £1 billion of savings held in Atom’s Instant Saver accounts.
With this latest boost from investors, Atom will seek to grow deposits by a further £2 billion in the 2023 financial year.
Commenting on the equity fundraise and what it means for the challenger bank’s plans for an IPO, Mark Mullen, chief executive officer at Atom, says: “It has been a year of excellent progress for Atom. We’ve achieved a number of important financial milestones, maintained our excellent reputation with our customers and with the introduction of our shorter four-day working week (with no loss of pay), we’re pioneering the future of work.”
“Our investors are now backing our continued growth. This capital will allow Atom to build on the progress we have made, and to keep offering real competition for people who want to own their own home, grow their own businesses and—at a time of rapidly rising costs—save for the future. It is also a fundamental next step on our journey toward IPO.”