SME lender Judo Bank raises $284 million for $1.6 billion valuation

SME challenger bank Judo Bank is an even bigger unicorn after scooping up $284 million in a round 4 capital raise. 

The raise values the bank, founded in 2016, at $1.6 billion, an increase of 60% on its valuation following a previous raise seven months ago.

Judo co-founder and co-CEO, David Hornery, said more than 60% of the funds raised came from the new investors, including UniSuper, while over 70% of the largest existing investors returned for the latest round

“The final tally for our Round 4 capital raise was $284 million, with the breadth and depth of demand  coming in at the very top end of our expectations,” he said. 

“Given this raise was completed during some of the most challenging market conditions in a generation, due to COVID-19, we are absolutely delighted with this result. 

“Judo has a proven track record of growth since inception and importantly is now generating profits – one of the very few new banks anywhere in the world that has gone into profitability in the space of  just three years.  

“We have furthered our support for Australian SMEs during the COVID period, growing business lending by 80% since March, based on APRA figures.”

Judo Bank previously tapped investors for $230 million in a third round in May 2020, in the middle of the pandemic. It pushed the neobank’s post-money valuation to more than $1 billion.

Honery said he was pleased by the commitment of investors both local and international, including one of Australia’s largest industry super funds, UniSuper, backing the venture for the first time. 

“The other new investors who have taken part in the raise include major international alternative investment manager, Magnetar Capital, as well as Moore Strategic Ventures,” he said.

Magnetar’s senior portfolio manager and European head, Alan Shaffran, said Judo was a high-growth challenger bank with “strong fundamentals, a quality leadership team and a differentiated position in the Australian market”.

UniSuper’s head of equities Simon Hudson said Judo Bank’s values were align with the industry fund’s.

“Judo Bank’s relationship banking model and dedication to small businesses has the potential to be very successful for all the right reasons. UniSuper is excited to invest and promote competition in this space,” he said.

“As they continue to execute their strategy, we’re very confident this will benefit UniSuper members and all Judo’s stakeholders.”

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.