London-based Starling Bank has announced its first acquisition, buying 7-year-old Fleet Mortgages in a cash and share deal worth 50 million pounds, or about $69,114,700.
The bank’s Monday (July 26) announcement comes on the heels of a recent report that the British FinTech company saw its revenue spike by nearly 600 percent in the first quarter of the year. Revenues soared to 97.6 million pounds for the period ending March 31, an increase from 14 million pounds for the period which ended Nov. 30, 2019. During that announcement, Starling had said it was adding a new account every 34 seconds, with 2.3 million open accounts as of the end of June.
With the acquisition, Starling Bank hopes to expand into the mortgage sector, a move that is part of a larger plan to bolster lending through a mix of strategic arrangements, organic lending and targeted mergers and acquisitions, the bank said in the announcement.
Fleet Mortgages, which is based in Hampshire, provides mortgages to homeowners who plan to rent properties out to tenants. To date, the lender has originated 2.3 billion pounds of mortgages without any credit losses. With the acquisition, Starling will become the sole funder of future originations. As reported previously, Starling’s deposit base grew by roughly 500 percent to 5.8 billion pounds, up from 1 billion pounds in 2019. Starling’s deposit base will be used to help Fleet Mortgages build upon its lending operation.
The mortgage lender’s daily operations will continue unchanged, per the announcement.
“Fleet’s existing management team will remain in place and Fleet will continue to operate as a stand-alone company, keeping the original name and brand,” said Starling Bank CEO Anne Boden. “We’re buying Fleet because it is very good at what it does, not because we want to change it.”
Fleet Mortgages CEO Bob Young said the deal will “deliver a significant benefit” to the firm and its partners. “This is a natural progression for our lending business, with both Starling and Fleet sharing a very similar cultural fit,” he said in the announcement.