Cash deposit platform Flagstone has received £108 million equity investment.
The deal sees Estancia Capital Partners, a US financial services specialist private equity firm, take a minority stake in the business.
Co-founded by Andrew Thatcher and Simon Merchant, Flagstone launched in 2015 to create a service-driven FinTech platform ‘that helps UK savers make their money work harder’.
Individual savers, small and medium-sized enterprises and charities using Flagstone – either directly or through multiple fintech platforms, financial advisers or brand partnerships – now 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.
It is now the largest UK cash savings platform by the number of banks and savings accounts on its panel. Serving a customer base of over 600,000, Flagstone’s total Assets under Administration now stand at more than £11 billion – increasing by more than £1bn per quarter in 2023.
Flagstone recorded its first quarter of profitability in December 2022 and the company has maintained accelerating quarterly profitability ever since.
“We selected Estancia based on the strength of their team’s experience in supporting ambitious businesses to transform the shape of the cash management market in the US,” said CEO Merchant.
“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 ability to meet its ambitious client growth targets by providing an easy to use platform, an excellent array of cash management solutions across yield and maturity options, and industry-leading levels of service that clients value.”
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.
Estancia’s Takashi Moriuchi and Keegan Mitchell will join the Flagstone board of directors. Darrin Jeffries will be a board observer.
The transaction is expected to close in the second quarter of 2024 after receipt of necessary regulatory approvals.