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Klarna’s UK rival Zilch raises $125M debt from Deutsche Bank ahead of IPO

Zilch team
Picture credits: Zilch

British fintech double unicorn Zilch raised $125 million in debt financing from German banking giant Deutsche Bank. This deal will help the company triple its sales in the next couple of years and move closer toward an initial public offering (IPO).

Buy Now, Pay Later (BNPL) has become a standard feature of online retail, with several logos appearing next to the more traditional payment methods. However, the double unicorn is seeking to create ‘BNPL 2.0’ by partnering directly with the consumer. 

Valued at $2 billion, the company will use the money to develop new products for a broader base of customers. The move is a sign of how buy now, pay later upstarts are continuing to double down on their products and loan growth. 

Zilch initially sourced credit for its installment plans and other loans from Goldman Sachs’ private credit arm. The company said the deal with Deutsche Bank came with more flexible terms, enabling it to draw down to $315 of total credit from different banks. The additional $190 million of credit will become available to Zilch as the firm continues to grow.

Plans for IPO in 2 years

Currently, the company aims to go public in the next 12 to 24 months. This deal is likely to help the company accelerate the path to IPO. As per CNBC, for every $1 of debt raised, the double unicorn can generate $30 of gross merchandise value (GMV), which is the combined value of sales processed on its platform. 

With $125 million of capital, it will drive $3.75 billion of gross sales. Therefore, with a total of $315 credit, it is expected to generate nearly $10 billion of GMV by 2026. 

To date, Zilch has achieved remarkable growth, amassing over 4 million customers and processing over 10 million monthly payments. The platform has already generated over £2.5 billion GMV and saved its customers over £450 million in fees and interest. 

Reshapes the BNPL industry

While buy now, pay later (BNPL) solutions like Klarna and Clearpay are leading the way in the UK, Zilch was founded by Philip Belamant in London. Its service allows users to pay for a purchase in six weeks without any fees or interest. 

With the launch of its proprietary Ad-Subsidised-Payments Network (ASPN), the company allows retailers worldwide instant connection with millions of Zilch’s first-party data, a closed-loop network of high-intent customers. Offering customers personalised savings, deals, and discounts codified to their habitual spend.

Last year, the fintech double unicorn opened markets for trading at the London Stock Exchange today to celebrate its third birthday. This announcement coincided with a series of achievements, including remarkable customer savings and growth, robust trading performance, and a string of industry awards. 

Zilch CEO and Co-Founder Philip Belamant said: “We’re thrilled to announce the financing as it marks a transformative step in Zilch’s journey. With this new securitisation, we’re poised to triple sales volumes and achieve significant capital efficiencies as we continue to drive billions in commerce to our retail network and, in turn, hundreds of millions in savings and subsidies to our customer base.

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