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Zilch has secured a European banking licence by purchasing a Lithuanian lender, in a bid to accelerate the $2bn fintech’s international expansion ahead of a potential IPO.
The London-based fintech, which provides consumer credit services, has agreed to purchase Fjord Bank for $38mn, according to two people familiar with the deal.
The purchase will allow Zilch to lend across Europe because Fjord, which has $120mn in assets, has a European banking licence.
Philip Belamant, Zilch’s co-founder and chief executive, said the transaction was a “defining moment” for the company that would allow it to provide consumer credit products more quickly across Europe.
“This is the next major step for us, which is to start to look outside of the UK,” he said in an interview on Wednesday.
An EU banking licence will enable Zilch “to passport consumer credit products across all of the countries by giving notice to each regulator. That means you can move much faster,” he said.
Belamant added that the deal would also allow Zilch to use customer deposits to fund its activities, rather than solely relying on more expensive private investors. “It brings us more capital efficiency as well, in terms of our cost base.”
The acquisition comes a month after UK regulators granted Zilch a payments licence, which will reduce the payment company’s reliance on third parties and allow it to develop more services. The move is part of a strategy to capture an increasing portion of customer wallets.
Other British fintechs are also trying to expand internationally, as the rate of growth in their home markets starts to slow. Monzo secured a European banking licence through authorities in Ireland last month.
Lithuania has sought to become a fintech hub by granting licences quickly, which incentivises fintechs to set up their European hubs in the Baltic nation. The UK’s most valuable fintech, Revolut, first secured a European banking licence from Lithuanian authorities in 2018.
Once regulators in one EU member state grant a lender a licence, it can use this to provide banking services across the bloc.
Zilch, which was founded in 2018 and has more than 5mn customers, offers a cashback debit card and zero-interest loans. It makes money from targeted advertising based on its transaction data, which it uses to smooth the cost of credit for consumers.
Its previous backers have included Goldman Sachs, eBay and DMG Ventures, the investment arm of the Daily Mail. In November the business raised $175mn to pursue mergers and acquisitions.
In 2021, when the fintech market was more buoyant, Zilch was valued at $2bn — a valuation that people close to the company claimed it had maintained in its recent fundraising round.
The company is often touted as a potential IPO candidate for the London Stock Exchange, which in recent years has contended with a dearth of listings.
Belamant said the Fjord acquisition could increase scale ahead of an IPO. “We can’t ignore the aspiration, which is for the business to be public. And we think having this regulatory umbrella, the knowhow, the team, allows us to get there much quicker and build the scale much faster.”
Belamant said in 2024 that Zilch could list elsewhere if the UK did not undertake reforms to boost capital markets. Since then, Chancellor Rachel Reeves has spearheaded reforms that aim to simplify regulation among other measures to encourage UK IPOs.