Goldman Sachs backed startup Starling has acquired a buy-to-let mortgage group- Fleet, for $50 million, making it their first-ever acquisition. Established seven years ago, Fleet manages £1.75bn of mortgages and anticipates originating another £800m this year.
According to people familiar with the matter, this is the first of many such deals, as the company will be looking to deploy its £6.7bn of deposits and build on its rapid expansion during the coronavirus pandemic. The acquisition of Fleet would be finalized on Monday, the people said.
The deal will see Starling become the sole funder of Fleet's buy-to-let mortgages to landlords, and Fleet will continue to operate under its brand.
Starling is on track to achieve its first full year of profitability after its participation in the government's Covid-19 rescue loan schemes boosted revenues the company claimed.
According to the company's boss Anne, Starling is "pulling away" from its startup peers and is eyeing an initial public offering in late 2022 or early 2023. Revenue surged 600 per cent last year during the pandemic, and it made a pre-tax profit of £7.3m in the first quarter, the Financial Times reported.
According to FT, Sterling pursues a more traditional strategy than some fintech peers, such as Monzo and Revolut building a substantial lending business from its balance sheet. Starling had lent only a tiny amount by the time the pandemic hit.
Still, its loan book grew from £54m to more than £2.2bn, courtesy of the government-backed coronavirus business interruption and bounce back loans.
Starling has a valuation in excess of £1 billion after a £272 million fundraising in March and further secured a £50 million funding from Goldman in April. Still, that valuation is dwarfed by rival Revolut, which saw its value peak at $33bn after a new investment announced earlier this month.
