Zopa Raises £80m in AT1 Capital via First LSE Bond
Zopa Bank has raised £80m (US$106.7m) in Additional Tier 1 (AT1) capital through its first bond listing on the London Stock Exchange, with the transaction more than twice oversubscribed from over 20 investors.
The digital bank, which holds a full banking licence, completed the fundraise on the International Securities Market (ISM).
AT1 capital, a form of hybrid capital that sits between equity and debt in a bank's capital structure, allows financial institutions to strengthen their regulatory capital position without diluting existing shareholders.
This fundraising follows a €80m (US$90m) equity round executed in November 2024 and comes as Zopa prepares to launch its flagship current account within 60 days.
Balance Sheet Strengthening
The funds will bolster Zopa's balance sheet as the bank enters the competitive everyday banking market. Following the transaction, Zopa Group Limited will re-register as an unlisted public company (PLC) within six months.
Steve Hulme, Chief Financial Officer at Zopa Bank, views the raise as validation of the bank's trajectory.
“Our latest capital raise is another strong vote of confidence in Zopa's momentum and model. Following a successful equity round just six months ago, this non-dilutive capital strengthens our balance sheet and positions us firmly on the starting line for our Bank Account launch,” says Steve.
The bank reported profits before tax of £34.2m (US$45.6m) for the financial year ending 31 December 2024, with revenue increasing by 30.2%. This performance demonstrates significant growth since Zopa launched its banking operations in 2020.
Strategic Partnerships
Zopa Bank, which operates as a digital-first financial institution focused on consumer lending and savings products, has recently formed strategic partnerships to expand its market presence.
The bank has partnered with Octopus Energy, Britain's largest electricity supplier, to enter the UK's £23bn (US$30.6bn) renewable energy market. It has also allied with retail giant John Lewis to offer personal loans directly to its 23 million customers.
“With profits doubling, strategic partnerships scaling, and innovation firing on all cylinders, we're not just gaining speed—we're shifting gears to become the go-to bank providing unmatched ease and value to millions of Britons”
Zopa Bank has attracted £5.5bn (US$7.3bn) in deposits since its 2020 launch and currently maintains approximately £3bn (US$4bn) in loans on its balance sheet. The institution employs nearly 850 staff and reports high employee satisfaction scores within the UK fintech sector.
Unlike many fintech companies or e-money institutions that operate without full banking licences, Zopa holds a complete banking licence, ensuring it adheres to the same regulatory standards as traditional banks.
Customer deposits at Zopa are protected by the Financial Services Compensation Scheme (FSCS), which safeguards up to £85,000 (US$113,000) per account.
The bank has received industry recognition, winning the UK's Best Personal Loan Provider and Best Credit Card Provider at the 2024 British Bank Awards.
Jefferies acted as Structuring Adviser and Sole Lead Manager to Zopa on the transaction.
“With profits doubling, strategic partnerships scaling, and innovation firing on all cylinders, we're not just gaining speed—we're shifting gears to become the go-to bank providing unmatched ease and value to millions of Britons,” says Steve.
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