(Bloomberg) — The head of Atom Bank sees “huge scope for growth” in British mortgages and business loans as the British lender looks to raise about £150 million ($189 million) to fund expansion ahead of a stock market listing as early as next year.
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Mark Mullen, chief executive officer of the digital bank, confirmed Atom was engaged in discussions with Jefferies as principal advisers with a view to raising more than £100 million but less than £200 million to “grow sustainably.”
“We’ve got to make sure that we get the right balance between the sustainability of the customer and the sustainability of the company,” he said in an interview with Bloomberg News. Last month, Sky News and others reported that Atom Bank was seeking £150 million.
Mullen said the bank has more than doubled its deposits since its 2021/22 financial year to £6.5 billion. He said the bank had issued about £5 billion of loans, with around £4 billion of this in mortgages. This growth comes at a tough time for British borrowers after a surge in repayment costs driven by rate rises.
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Any sums Atom raises would add to more than £500 million it’s previously received from investors, mostly recently in November when it raised £30 million. It would also mark a rare funding round at a time of heightened concern in Europe and the US about the banking sector, following the collapse of Silicon Valley Bank and rescue of Credit Suisse Group AG last month.
Investors have chopped valuations across the industry, including for Atom Bank. An investment trust run by Schroders Plc downgraded the bank’s price tag from about £460 million to about £310 million this month. Still, the Schroder UK Public Private Trust’s latest annual report said Atom Bank was now profitable and it was encouraged by the firm’s “operational progress.”
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Other Atom backers included Spanish banking giant BBVA, Infinity Investment Partners and Toscafund.
Four-Day Week
Atom recently made its switch to a four-day working week permanent after a “transformative” trial year, which a saw record number of new customers and fewer employees leaving.
“Our people like it, they value it. It’s a differentiator because it’s still quite rare and it’s just become the normal way of running the company,” the CEO said, adding his firm was the single biggest private employer in Durham in the north east of England, with nearly 600 staff.
While the UK had seen “unprecedented political instability” that had been “absorbing energy” for companies, Mullen is not writing off the London Stock Exchange as a place to eventually list shares.
“We’re a UK business. Our customers are in the UK. We have no plans at the moment to expand beyond UK borders,” he said. “So our default position would be that we would look for a listing in the UK.”
The company is readying itself for an IPO as early as the second half of 2024 or the first quarter of 2025, he said.
