Zopa backer says bank needs to strike balance between profit and growth
The chief executive of Zopa investor Augmentum Fintech has said that the digital bank should not focus on profitability “at all costs” as part of its plans for a stock market flotation.
The digital bank, which started life as a peer-to-peer lender, has previously said that reaching profitability would be a prerequisite for an initial public offering (IPO) and it was on track for that target during the last quarter of 2022.
Tim Levene told The Times that while Zopa had shown that it could continually generate a profit, there is still an opportunity for it to grow market share.
“So it is about striking the right balance and in my view the business is not in a position where it has to focus on profitability at all costs, at the expense of growth,” he said.
“Ultimately, there is still a long way to go. From my point of view, their focus over the next 12 to 18 months should be carrying on executing the business that they’re building and not worrying too much about the exit.”
Zopa has been open about its desire to go public for several years but has delayed its plans due to the pandemic and challenging macroeconomic conditions.
It made its first acquisition earlier this month, of buy-now-pay-later provider DivideBuy, just two weeks after raising £75m to drive its growth and support a dealmaking push.
A spokesman for Zopa told The Times: “We see the IPO as a milestone of an exciting journey, not as its final destination. We still plan to IPO and can be ready in a short time. But we will not be rushed to make hasty decisions.”
Since launching in 2020, Zopa bank has attracted £3bn in deposits, more than £2bn of loans on balance sheet, and issued close to 400,000 credit cards.
Augmentum Fintech is the only listed investment fund dedicated to the fintech sector. It has invested in Zopa since 2012, when it was still a P2P consumer lending platform. Last month, an update revealed that Zopa is the second largest investment in its portfolio.