Capitalflow targets banks after sale to Dutch fintech

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Irish SME lender Capitalflow is acquired by Dutch start-up Bunq in a deal that could see the company provide deposit-based loans for the first time.

The lender, which was founded by former Bank of Scotland Ireland banker Ronan Horgan in 2016, currently provides asset finance and bill remittance to small businesses, funded by wholesale banks.

But with Bunq’s backing, Capitalflow will have access to up to € 1 billion in Dutch commercial savings, which will allow it to lower prices while increasing lending volumes.

The company aims to increase total lending by € 1.2 billion over the next three years – a sharp increase from its growth trajectory over the past five years, when Capitalflow advanced € 650 million. business facilities.

As part of the transaction, Capitalflow private equity owner Pollen Street is investing in Bunq alongside founder Ali Niknam in a € 193 million funding round, theoretically valuing the challenger bank at 1.6 billion euros.

Bunq is a licensed challenger bank rival of Revolut and N26 that charges customers a subscription for services.

Pollen Street, the former private equity arm of RBS, is a major investor in UK challenger Shawbrook Bank and real estate auction platform BidX1. The flow of capital struggled throughout 2020 as appetite for credit died down during the pandemic, but Horgan said May and June were the best two months for lending in history. business, as leasing activities resumed with the reopening of the economy.

“Our goals are not too ambitious when you factor in bank financing and when you look at the Irish banking landscape with Ulster Bank and KBC leaving the market. “

However, lending has been slow to pick up this year, even as the government has removed restrictions on non-essential businesses in recent months.

ISME’s Bank Watch quarterly report for the second quarter found that demand for loans from SMEs fell in the second quarter, although bank refusal rates fell, indicating less appetite for credit despite the will. banks to lend.

“The macro problem for small businesses is the continued shrinkage of the retail banking market to what is now an effective duopoly,” said Neil McDonell, CEO of ISME.

Mr Horgan said his aim was to develop Capitalflow into a credible alternative to the mainstay banks, AIB, Bank of Ireland and Permanent TSB.

“We will have access to bank financing at much more competitive rates and can really compete with retail lenders,” he said.

“The price was holding us back, but this acquisition allows us to target customers previously served by banks. Customers say they never want to depend on one bank.


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