UK-based cash deposit platform Flagstone has announced a £108 million equity investment by Estancia Capital Partners, a US financial services specialist private equity firm with deep expertise in the cash management market. This is the second largest fintech deal in the UK, which came close on the heels of Monzo’s recent mega deal. This shows that the UK fintech sector is attracting significant US investments at a time when funding continues to be down.
Funds utilisation
The deal combines primary and secondary investments. The primary investment will be used to further consolidate Flagstone’s position in the cash deposit market, building greater brand awareness, doubling down on partnerships, and matching competitive savings products with a premium customer service. The secondary investment will be used to reward Flagstone’s earliest backers, enabling them to realise a significant return on their investments.
As per the deal, Estancia takes a minority stake in the Flagstone business. In addition, Estancia’s Takashi Moriuchi and Keegan Mitchell will join the Flagstone Board of Directors and Darrin Jeffries will be a Board Observer.
A cash savings platform
Flagstone was founded in 2015 by Andrew Thatcher and Simon Merchant – two friends with a vision to revolutionise the cash deposit and savings market. It helps recreate the way people grow their money by offering a way for people to get better returns on their investment, while protecting their cash.
Touted to be the largest UK cash savings platform, individual savers, small and medium-sized enterprises (SMEs) and charities use Flagstone either directly or through multiple fintech platforms, financial advisers or brand partnerships. Flagstone reaches consumers directly and through APIs with platforms, including St James Place, Revolut and Saga.
They have the opportunity to access over 200 savings account offerings available from 60 of the UK’s leading cash savings providers, from the largest incumbent banks to the challengers. Serving a customer base of over 600,000, Flagstone’s total Assets under Administration (AUA) is over £11 billion.
Simon Merchant, Co-Founder and CEO of Flagstone, commented: “At a time when funding capacity is down on a global scale, Estancia’s investment and market expertise provides us with the firepower necessary to really capitalise on the opportunities ahead of us, whether those be through organic growth, partnership and acquisitions, and prompt further consolidation of our market leadership position.”
Takashi Moriuchi, Co-Founder & Managing Director of Estancia, commented: “We are excited to mark our entry into the UK savings market at a time when the opportunity to disrupt this status quo is enormous, and innovators like Flagstone must take the lead. We are thrilled to partner with Simon, Andrew, and the talented Flagstone team. Flagstone consistently demonstrates its ambition and capacity to grow while sustainably serving customers with cash management solutions and a level of service they value.”
Darrin Jeffries, COO & Managing Director, and Keegan Mitchell, Vice President at Estancia, added: “Our partnership with Flagstone is an all-around winning combination, as we see many parallels with our two most recent successful experiences in the US deposit marketplace, R&T Deposit Solutions and PMA Financial Network. Flagstone’s success since launching in 2015 is already impressive. However, our investment thesis is that the growth opportunities remain vast and exciting.”
Andrew Thatcher, Co-Founder and CEO of Flagstone International, stated: “As we mark this important milestone, we are delighted to work with an investment team with the track record and international expertise that Estancia brings. It is evident that the market opportunity is significant for our business on a global scale, and we are excited to take advantage of that and move our business on to the next stage.”
