SME lender Judo Bank just became a unicorn with another massive $230 million raise

Judo Bank’s existing backers have stumped up $230 million in a third round capital raise that raises the neobank’s post-money valuation to more than AU$1 billion. 

The challenger bank targets lending to small to medium-sized enterprises (SMEs) and has now raised more than $770 million in capital since its launch in March 2018, including a record $400 million second-round equity raise in July last year. 

Co-founder and co-CEO, David Hornery, said the global economic uncertainty caused by covid-19 meant that only existing shareholders took part in the latest capital raise.

Judo Bank’s existing investors include Bain Capital Credit, Myer Family Investments, the Abu Dhabi Capital Group, Ironbridge, SPF Investment Management, OPTrust, and Tikehau Capital. 

“The support we’ve received for our third round, at an increased valuation to our second round capital raise last year, underscores the confidence and commitment our existing investors have in Judo, particularly at a time of extreme volatility in global markets, that has impacted all bank valuations,” Hornery said. 

“The value of having a diverse group of substantial and sophisticated investors, that believe in Judo’s commitment to the Australian SME market has never been more evident – nor come at a more important time.” 

The bank now has more than $1.5 billion in deposits – the bank is offering between 1.6% and 2.15% interest on term deposits between 3 months and 5 years – and has already written more than $1.5 billion in loans, with around 10,000 customers across both loans and deposits.

And with the federal government backing the boutique lender last month to the tune of $500 million through the Australian Business Securitisation Fund and Structured Finance Support Fund, Hornery says the bank is well capitalised to make further inroads into the SME market at a time when lending to the sector is crucial.

“We now have one of the strongest capitalised tier-1 ratios in the country, and intend on rapidly growing our national footprint, and expanding the products and services we offer to thousands of Australian SMEs, whose needs have long been ignored by the major banks,” the CEO said. 

“The additional capital supplements the strong lending and deposit growth Judo has achieved over the last 12 months, as well as the fully committed $350 million Citi facility obtained earlier this year.”

Australia’s biggest bank, CBA, today announced it had approved more than $555 million in loans for SMEs through the government-backed SME Guarantee Loan Scheme to more than 6,500 customers with businesses hit by the coronavirus pandemic.