Estonia-based LHV Group has acquired a 9.9% UK-based SME-focused challenger lender Bank North (previously B-North) for £4.455m.
The lender has successfully closed a £20m Series A funding round and received a banking licence from the UK Prudential Regulatory Authority (Authorised with Restrictions – ‘AWR’).
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Investors such as Skipton Building Society, Channel 4 Ventures and the Greater Manchester Combined Authority also participated in the round.
Additionally, pension funds managed by AS LHV Varahaldus have invested in Bank North.
Bank North plans to use the funds to develop its technology and use it as operating capital to start its lending activities.
Founded in 2018, Bank North is being developed to serve the UK business lending market as a local bank with a focus on SMEs.
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By GlobalDataBefore rolling out its services across the UK, the lender plans to offer ‘lending’ pod services in Manchester later this year.
Bank North relies on cloud-native banking technology, which powers a network of regional ‘Pods’. It claims that through its model, businesses can get loans ten times faster than the industry standard.
LHV Group CEO Madis Toomsalu said: “With an experienced team and high growth ambitions Bank North has a strong readiness to commence business activities, and aims to disrupt the £150 billion UK SME lending market.”
“Bank North’s plan to provide necessary credit to local SME-s more efficiently than competitors, combining the best technological solutions with relationship banking is a business of great growth potential, as proven by LHV.”
In March this year, Starling – another challenger bank in the UK joined the unicorn club after bagging £272m in its largest-ever funding round, taking its valuation to £1.1bn.
