Atom Bank, the pioneering “digital only” lender, has raised £25m from top investors to launch its challenge to traditional high street banks.
The Durham-based challenger has attracted backing from top fund manager Neil Woodford OBE, who leads a group of 70 institutional and private investors.
Mr Woodford’s CF Woodford Equity Income Fund provides the “cornerstone” of Atom’s shareholder base, which also includes North East backers from previous rounds.
Regional investors include Sir Peter Vardy, NRG’s Lorna Moran, British Engines and Jeremy Middleton, while others include Jim O’Neill, former chair of Goldman Sachs Asset Management, Polar Capital, Anthemis Group.
The latest round adds to Atom’s base of 40 founding investors, and will be followed with a further fund raising exercise in Spring 2015 which aims to secure £100m to fund the bank’s balance sheet.
Speaking to The Journal, Edward Twiddy, Atom’s chief operating officer and director of innovation, said the money would be used to continue recruitment and the cementing of partnerships.
Mr Twiddy said: “This is money has been put in place to build the bank. It will allow us to continue recruitment and initiate partnerships, particularly with the organisations which will be providing the technology behind Atom.
“It would be completely wrong to suggest anything other than the North East’s support for Atom is making this a reality. Our regional founding investors have provided the basis for us to take our proposition national. We really can’t underestimate the backing of the North East.”
He added: “This fund raising shows that in a risky environment people are still looking for great ideas to invest in.
“We have brought in a number of investors who will be able to follow up their initial investment in subsequent rounds. There are also unnamed parties who have the capacity to come forward in the future.”
Following the investment announcement Atom chief executive, Mark Mullen, said: “As we continue to move closer towards authorisation, our strong financial position and the support from individual and institutional shareholders positions us well for our planned launch in 2015.”
Udayan Goyal, founder of digital financial services investors, Anthemis Group, said: “We believe the UK banking industry is ripe for disruption and Atom is well placed as a leader effecting this change.
“The bank has a strong and experienced leadership team in Anthony Thomson and Mark Mullen. Atom is a welcome addition to our investment portfolio as we continue to focus on reinventing the financial services landscape.”
In the next week Atom’s digital development team, who will be building the bank’s app, among other features, are due to move into the Durham headquarters.
Mr Twiddy confirmed this group is likely to grow in early January as recruitment through Newcastle-based NRG continues.
Atom confirmed that none of the current shareholder base will assume board positions, even though the size of Neil Woodford’s investment would allow him to do so.
A further major board appointment is expected to be announced in January. The candidate will join Lord John McFall, a member of the Parliamentary Banking Standards Commission, among others who were recently announced.
Atom Bank is currently waiting for a banking licence from the Financial Conduct Authority.
Support for the fund raising came from Simon Watts and Ben Butler from law firm Bond Dickinson, working alongside the Newcastle and London offices of PwC.