Exclusive: Lunar Bank to Acquire Veteran FinTech Lendify
Lendify, a veteran Swedish digital lender, is acquired by Lunar, a Danish digital bank, Sifted has learned.
The acquisition comes after a difficult 2020 for alternative lenders like Lendify. In particular, the startup saw its application for a rejected credit license – destroy the hopes of a public listing and a more competitive loan template – as well as the departure of his founder.
Sources close to Lendify, which has become a household name in its native Sweden, said the sale was slightly north of “100 million euros” and was largely bought in lunar stocks (rather than in species). For context, Lendify was last evaluated at $ 1 billion.
Lendify’s “ quickfire ” sale could hint at a wider malaise around alternative lenders. This pool of digital lenders basically borrows money from institutions or retail investors and then lends it at competitive rates, but it costs more than lending deposits (which only licensed banks can do). Over the years, the price of loans has created reduced income and few have exceeded it.
The change in momentum has also led banks like Starling to look for possible mergers and acquisitions in the area of lending.
Indeed, alternative lenders are quickly out of fashion in the Nordic countries, says Lunar founder Ken Villum Klausen.
“The Challenger bank with licenses is getting a premium in the market right now … Stand-alone lenders probably aren’t.”
For its part, Lunar is an upcoming but relatively small player, concentrated in the Nordic countries. It raised 40 million euros in total last year, in the context of the pandemic, and claims to welcome 20,000 users each month.
The acquisition will now allow Lunar users to access credit products (such as loans) and offer investment products to users. This will allow Lunar to operate its “massive excess deposits” with limited risk, says Villum Klausen, who says “it takes a long time to enrich the credit scoring models.”
He explained: “Lendify has an incredible brand in Sweden. They have talented people in the tech field … But it ended up in a position where it’s an expensive model [to lend without a licence]. “
Lendify, which employs around sixty people, would not have been profitable and would have achieved an annual turnover of around 25 million euros. Its loan portfolio amounts to around € 300 million alongside 40,000 active savings and loan clients.
The company is expected to continue operating as an independent platform, although Lunar will now make loans under its own brand.
Lendify CEO and Deputy CEO is leaving the company, but Villum Klausen said relations were good and seamless integration of people and technology was expected.
“It’s not a company run by a founder, so it’s a more seamless transition,” he told Sifted.
The acquisition is currently pending regulatory approval, slated for mid-May.
Lendify investors include Insight Ventures and active angels like Håkan Roos and Richard Göransson. Since its creation in 2014, the company has raised a total of 90 million euros in equity.
The uneasiness of the alternative lender
For better or for worse, it was Wonga who put “challenger lenders” on the map. The UK payday lender experienced a meteoric rise before it collapsed after a string of irresponsible and bloated lending.
The controversy has not stopped the attractiveness of the industry at large among investors. From Latvia to London, the VCs have pumped money into specialist funders in recent years.
However, Covid seems to have taken the wind in the sails of the sector.
Non-bank lender Ratesetter was bought for just £ 12million last year, as peer-to-peer lenders have come under pressure individual investors withdraw their funds.
Exceptions include Lendable, which recently won a $ 1 billion award from investors.
Lendify is by far one of the biggest in Sweden; a “household name,” according to Villum Klausen (who actually named the company earlier this year as a “one to watch,” before meeting them).
Others in the Nordic space include Bynk, Brocc, and Toborrow.