U.K. commercial FinTech OakNorth was valued at $5 billion following Indiabulls Housing Finance‘s sale of a portion of its 40% stake in the startup bank, The Block Crypto reported, citing unnamed sources. Goldman Sachs acted as an advisor on the deal.
Indiabulls, a mortgage lender headquartered in Gurugram, Haryana, India, is the country’s second-largest housing finance company. It sold 251 crores (about $34 million) of its stake in the business bank, which it acquired in 2015, according to a regulatory filing.
At the end of 2020, Indiabulls sold an estimated 7.7 % of its stake in OakNorth across two transactions, worth about $145 million. At that time, the bank was valued at roughly $2 billion, down from its previous valuation of $2.8 billion, following its raised $440 million funding round led by SoftBank Vision Fund and Clermont in February 2019.
Founded in 2013 by Rishi Khosla and Joel Perlman, OakNorth is a FinTech bank that focuses on making loans to small- to medium-sized businesses (SMBs) in the U.K. The founders launched the neobank after searching for a working capital facility to support the growing needs of their financial research outsourcing firm, according to the OakNorth website.
Although their business was turning a profit and had strong cash flow and customer retention, commercial banks couldn’t accommodate them. They later got the needed funds from the institutional division of a client’s bank.
The duo scaled that business, and it was acquired a few years later by Moody’s Corporation in 2014. The experience prompted Khosla and Perlman to launch OakNorth in 2015 and develop the ON Credit Intelligence Suite.
The challenger bank said it seeks to empower the “missing middle” — growth companies that play a big role in economic and employment growth but have trouble getting fast, flexible debt finance.
“We are redefining the way banks lend to the missing middle, giving today’s entrepreneurs access to the capital they need to grow, create jobs, build communities and power our economy. … We’re transforming commercial lending so entrepreneurs can thrive,” according to the company’s website.