- Xinja Bank will receive A$433 million over 24 months, including $160 million initially
- The Abu Dhabi backers are leading global banking investors
- The funding will help the neobank grow as it launches personal loans and mortgages
- The raise comes as Xinja concludes a $50m equity crowdfund
An United Arab Emirates investment company is backing Xinja Bank to the tune of A$433 million over the next two years in a new record for a local digital bank or startup.
Emirates’ World Investments (WI) will invest A$160 million immediately, with the remaining A$273 million available to be drawn down in multiple tranches to fund Xinja’s growth over the next two years. The foreign investment will need the blessing of regulatory authorities, with World Investments taking a major stake in the neobank that will increase above the 20% benchmark set by the Australian Prudential Regulation Authority as the balance of the investment flows into the digital bank.
The deal provides a bright spot for Australian fintech amid global market chaos in the wake of the coronavirus pandemic. First Penny Investments brokered it for the bank.
The neobank recently turned to equity crowdfunding again, in a Series D raise seeking $50 million from wholesale investors at $4.08 a share on a valuation of $235 million.
The raise closes tomorrow.
Founder and CEO Eric Wilson said he thinks the IW funds are the largest single investment in an Australian neobank or startup, with the deal finally inked last week.
“We are very happy to welcome World Investments as investors in Xinja Bank. WI personifies ‘smart money’. These are investors who bring deep skills and knowledge in banking to help us grow and be successful,” he said.
“We are only a small part of the economy, but we are committed to continuing to deliver the best in banking outcomes for our customers.”
The bank, which launched nearly two years ago and received its full banking license in September last year, has yet to begin lending to customers, focusing instead on building up its deposits, with $450 million from 45,000 accounts now on its books.
After the RBA cut interest rates earlier this month, Xinja announced it would hold its savings rate at 2.25% but was forced to close the offer to new accounts as customers moved their cash to the safety of the government guaranteed accounts. $400 million flowed into the “Stash” accounts in just 8 weeks.
World Investments is based in Dubai as has major equity holdings in banks in Europe, the Middle East, and now Australia.
WI CEO His Excellency Zayed bin Rashid Al Qubaisi said Xinja Bank is at the cutting edge of next generation banking in Australia.
“Its technology, commitment to customers and ethical banking philosophy made it an obvious investment choice for us,” he said.
Xinja is planning to launch personal loans and home loans later this year.