LVH Group, the largest domestic financial group and capital provider in Estonia, has agreed to invest £4.45m in Manchester-based SME-focused challenger lender B-North.
The Estonian firm, whose banking services are used by 269,000 clients, said that it would pick a share of 9.9% in the challenger bank as part of the deal.
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At present, the challenger is in the process of applying for a full UK banking licence from the UK Prudential Regulatory Authority and Financial Conduct Authority and looks to complete a £20m Series A funding round.
The investment round would be closed by the second quarter of this year, noted LHV.
B-North has also been backed by Greater Manchester Combined Authority and Channel 4 Ventures, along with a series of crowdfunding rounds.
The goal is to disrupt the £150bn UK SME lending space by setting up regional ‘lending pods’ combined with a cloud-based banking system. It claims that through this model, businesses can get loans ten times faster than the industry standard.
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By GlobalDataB-North co-founder and CEO Jonathan Thompson said: “LHV’s commitment will form part of the £20m capital raise we need to secure before being granted our banking licence.
“This investment from LHV is a significant boost to our capital raise and shows real momentum and investor appetite for our vision for business lending in the UK and is the latest step in our journey from B-North to Bank North.”
LHV has a workforce of over 540, with its key subsidiaries being LHV Pank, LHV Varahaldus, and LHV Kindlustus.
Meanwhile, Starling – another challenger bank in the UK- recently joined the unicorn club after bagging £272m in its largest ever funding round, taking its valuation to £1.1bn. The Fidelity Management and Research led the series D round.
Last month, UK-based challenger bank Monzo said that it is set to extend its Series G funding round by raising an additional £50m.
