Business payments startup Novatti Group has $10.5 million in series A commitments for its new banking venture.
The listed fintech (ASX:NOV) is launching a banking subsidiary, Novatti B Holding Company (NBHC), and has applied for a restricted banking licence from the regular, APRA, setting itself and investors a deadline of February 2022 for approval.
In a statement to the market, the company said the series A round will be used accelerate the development of this new business when and if it receives a restricted ADI by the February, with the funding committed by investors, conditional on that approval.
Novatti has also acquired the $2 million equity stake in NHBC held by BC Growth Investments, which was part of the seed funding round into NBHC in May 2021.
The acquisition, for $2m in cash, will give Novatti a 70% stake in NHBC following the series A round.
Managing director Peter Cook said completing the series A round for our new banking business enables them to plan for the growth of the new bank post regulatory approval.
“This is important as we want to hit the ground running to ensure we capture the strong momentum we are seeing from consumers and investors backing fintechs that can provide new and innovative banking services,” he said.
“Our new banking business remains a key pillar of our growth strategy as it will enable Novatti to offer new, value-add services to our customers while also driving increased margins.”
NBHC CEO Guy Carvalho said the longer term goal is securing a full banking licence.
“We are excited by the opportunity to offer the Australian market new services and will continue to work constructively with Australia’s banking regulator to obtain a restricted licence,” he said.
Novatti has been on global growth and acquisition drive in 2021, having expanded its partnership with Ripple into Thailand, raising $0 million in capital and taking a 19.9% strategic stake in accounting software platform Reckon.
The business posted total annual revenue of $18.4 million for FY21, an increase of 55% on FY20.
Novatti shares are up more than 3.5% in Thursday morning trade to 44 cents.