UK-based digital lender Zopa has raised £75m in funding from existing investors, reported Reuters citing CEO Jaidev Janardana.

The equity funding round was led by IAG Silverstripe, with participation from venture capitalist Augmentum and Davidson Kempner, a hedge fund based in the US. 

Zopa did not disclose the valuation for the investment round but noted that the latest fund raise “cements” its unicorn status. 

The latest capital infusion increased the firm’s post-money valuation, a source aware of the development told the news agency.

Zopa plans to use the proceeds to fund potential acquisitions, including companies of similar size. 

The bank could also consider raising more cash or offer its shares to help fund larger buys, Janardana said. 

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Founded in 2005, Zopa began operations as a peer-to-peer (P2P) lending firm and in late 2021 it closed the P2P business to focus on digital banking. 

According to Janardana, Zopa is likely to report another annual loss in its next annual reports for 2022 due to anticipated provisions for future loan losses and the country’s economic slump.

He added that the digital bank had reported monthly profits multiple times last year. 

If market circumstances do not drastically improve over the next several months, Zopa, which had planned to go public by 2022, is more likely to launch its initial public offering (IPO) next year, the chief executive said. 

Zopa could also tap the market to raise up to £100m of Tier-2 debt later in 2023 to boost its balance sheet but the plans are dependent on the cost of debt, he added. 

In October 2021, the digital bank raised £220m in a funding round led by SoftBank Vision Fund 2.