US-based private investment firm IAG Capital has agreed to acquire a majority stake in peer-to-peer lender Zopa Group as part of the capital-raising by the fintech group.
The Zopa Group is expected to finalise a £130m capital injection that will enable the company to pursue its ambition of becoming a challenger to Britain’s biggest banks, Sky News has reported.
Zopa is reported to be holding talks to secure the funding from an entity belonging to IAG Capital Partners, and Silverstripe, its UK subsidiary.
The Sky News report quoted sources as saying that a deal is expected to be signed early next week.
The deal, if completed, would come before the expiry of Zopa’s banking licence-with-restrictions a year after it was granted.
According to sources, the company requires additional funding to fulfil regulatory capital requirements.
Sources also said that the funding was negotiated at a steep discount to Zopa’s previous capital-raising in 2018.
The new cash injection is also expected to give IAG Capital a majority stake in Zopa.
IAG Capital already has a small stake in Zopa, which was established 15 years ago as a peer-to-peer lender to build a prominent consumer brand.
The lender has so far issued loans totalling £5bn, including £1bn in the last year alone.
The company has a workforce of 500 and is claimed to be among Britain’s biggest fintech companies.
IAG Capital, based in South Carolina, is a serial investor in financial services companies.
The company’s portfolio includes Bamboo, a consumer loan provider based in the UK, and Credit One, a US-based bank that serves customers with poor, or no, credit ratings.
In December, Zopa announced that it will launch a fixed-term savings product protected by the Financial Services Compensation Scheme (FSCS), credit card and a money management app this year.
The company expects a full authorisation of its banking licence to enable the acceleration of these products.