Zopa backer Augmentum Fintech has said that it expects the peer-to-peer lender to become an “incredibly valuable asset” once its bank officially opens for business.
The fintech-focused investment trust said Zopa has a bright future, despite the recent write down in its valuation.
Zopa was first given restricted permissions to launch a bank in 2018 and gained a full banking licence last month after it announced a £140m investment from IAG Silverstripe in December 2019 that allowed it to meet the necessary capital requirements.
“The process to acquire a bank licence has become exceptionally rigorous and this licence will, we believe, become an incredibly valuable asset over time,” Tim Levene, chief executive of Augmentum Fintech Management, said.
“Zopa Bank will launch with a clean balance sheet and start by offering a fixed term saving account followed by an innovative credit card later in the year.”
Zopa makes up 6.4 per cent of Augmentum’s portfolio.
Augmentum’s portfolio also includes investments in fintech firms and online platforms such as alternative lender Iwoca, expenses app Receipt Bank and will writing website Farewill.
Its annual results, released on Thursday, said all its portfolio companies had grown revenues and the fund posted a net asset value return of 5.9 per cent.
Read more: What’s happening at Zopa?
“Although it is likely that retrospective figures will show a decline in overall venture capital investment activity during 2020, funding and valuations will remain competitive for those companies thriving under the new normal,” Levene said.
“Nevertheless, this will be a more challenging period to navigate for businesses and some may require short term support as they feel the impact of a changing macro environment.
“The opportunity to capitalise on the shifts in consumer and business behaviour in regard to digital financial services is greater than ever.
“Incumbent players still control more than 90 per cent of the global market, and many of the financial services giants of tomorrow are yet to emerge.”
Levene said the investment trust’s focus remains on fairly priced companies and he predicted there will be more opportunities for mergers and acquisitions over the next 12 months.