Starling Bank to seek $3.4 billion value in funding round

Starling Bank Ltd. is weighing plans for a fresh funding round that could value the U.K. challenger at around 2.5 billion pounds ($3.4 billion), according to people familiar with the matter.

The digital lender is considering raising money from its existing backers, which include Goldman Sachs Group, the people said, asking not to be identified because the information is private. 

London-based Starling is bidding to acquire the platform of the specialist mortgage lender Kensington and could use proceeds from the new funding round to expand the business’s origination capabilities, one of the people said. Kensington, which is backed by Blackstone, offers home loans to the self-employed and people over 55 years of age. 

Simon Dawson/Bloomberg

Starling secured 272 million pounds from investors including Fidelity Management & Research, Qatar Investment Authority and Millennium Management last March. Starling has opened more than 2.5 million accounts since launching in 2014, according to its website.

The startup is one of the companies the U.K. is hoping will list at home as the battle to attract technology companies ramps up. Anne Boden, Starling’s chief executive officer and founder, said last year that London would be its venue of choice for an IPO in late 2022 or early 2023.

Deliberations are in the early stages and no final decisions on the size or timing of any funding round have been taken, the people said. A representative for Starling declined to comment. 

Recent stock market volatility and a rotation away from frothy assets has complicated the route to going public for many startups. At the same time, an abundance of funding remains on offer in the private markets. The Swedish payments firm Klarna Bank AB is weighing plans to raise new money to cement its status as Europe’s most valuable startup, Bloomberg News reported this week.