Atom Bank raises further £100m from shareholders, shakes off valuation hit as London IPO looms

Atom Bank has completed a £100m equity raise from long-term shareholders as it prepares for a likely London IPO, while the digital lender’s chief executive told City A.M. that its lower valuation “doesn’t matter”.

The backing from its shareholders, including Spanish bank BBVA and private equity firm Toscafund, will help Atom to ramp up its lending to businesses and households.

The bank said the capital, the last it will be raised before a flotation, will be used to accelerate balance sheet growth, offer savers better rates and enable more lending to SMEs, first time buyers and homeowners.

Chief executive Mark Mullen said he was “delighted with this vote of confidence” from Atom’s investors.

“This money will be put to work to drive growth and to fuel the development of our franchise. UK customers need better outcomes and better banks,” he said.

Despite the £100m in backing, the funding round valued the challenger at £362m, down from £435m at the start of last year.

“What’s driving the valuation is much more to do with market conditions and bank benchmarks than testing the performance of the company in an open market, because it’s private,” Mullen told City A.M.

“The valuation today doesn’t matter. The valuation when we list the bank or when we sell the bank really does matter.”

Atom was founded in 2014 by Anthony Thomson, co-founder of Metro Bank, and Mullen, a former senior executive at HSBC and First Direct.

The branchless digital lender won its full banking licence in the UK back in 2016 becoming one of the UK’s first app-based banks.  

Over the summer the Durham-based challenger reported a £4m operating profit in the 2023 financial year, up from a loss of £2m the year before. It remains deeply on the red on a statutory basis.

The capital raise will add to speculation that Atom Bank is on its way to an IPO in the not-too-distant future. It shelved plans for a London IPO last year due to volatile market conditions but Mullen has been open about his ambition to list in London.

“We’re a UK company serving UK customers, so it’s natural that we would think first about London,” he said. “In my mind, it’s the most logical place for the company to look for a listing.”