Starling Bank eyes 2022 IPO and expects to break even by 2021
UK challenger Starling Bank is planning to float on the stock market in two years time and says it anticipates to break even by the end of next year, Daily Mail reports.
“I didn’t do all of this to sell out to a big bank,” says CEO and founder Anne Boden. “I think the future for us will be an initial public offering (IPO) in two to three years’ time.”
Boden continues: “We’re demonstrating a path to profitability that other digital banks have not, and we plan to break even at the end of next year.”
In the year to 30 November 2018, which is the last period that Starling filed its accounts, the challenger had made a loss before tax of £26.8 million. To put this into context, fellow challenger bank Revolut recorded a £32.8 million loss after tax in 2018. Similarly, Monzo reported a £33.1 million pre-tax loss in 2018.
Having raised £263 million to date in investments since it was founded in 2014, the challenger is determined not to sell out to a major high street bank when backers decide to cash in, instead listing the business on the London Stock Exchange (LSE) through an IPO. This would give Starling’s customers the chance to buy shares in the challenger.
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There is yet to be a UK digital challenger bank which has applied for an IPO. Tandem revealed it was eyeing an IPO at the beginning of last year “within the next few years”, but the bank has said nothing more on a solid deadline or under what conditions it would apply for one.
Revolut’s founder and CEO Nikolay Storonsky has said he will not consider an IPO until Revolut has hit $20 billion in valuation. Currently, the challenger’s valuation is uncertain. It was last recorded as $1.7 billion in 2018, prior to the announcement of an imminent $500 million funding round along with a $1 billion convertible loan from JP Morgan which will turn into company shares if the challenger gets a US banking licence.
Boden is adamant that Starling needs to break even and make a profit before any listing on the stock exchange.