Japanese bank SMBC invests £22.4m into OakNorth

OakNorth CEO Rishi Khosla praised SMBC's "adoption" to changes in the economy

Credit: Alex Rumford/Alex Rumford

Japan’s Sumitomo Mitsui Banking Corporation (SMBC), one the world’s largest banks, has invested $30m (£22.39m) into British fintech player OakNorth.

The London-based firm licenses its artificial intelligence technology to banks around the world. It speeds up the loan approval process by using automation to more accurately check a customer’s credit worthiness.

SMBC bought into the company as part of a secondary share sale initiated last month by struggling mortgage lender Indiabulls Housing Finance, the country’s third-largest mortgage lender.

The Japanese bank, which has over $2 trillion in assets, has also become a client of OakNorth’s proprietary Artificial Intelligence (AI). SMBC will use the software to handle its loan book in the US and Asia.

OakNorth uses its technology to improve the quality and pace of commercial lending decisions. Its software can crunch data to more accurately predict if a borrower is likely to default.

Rishi Khosla, co-founder of OakNorth, said that SMBC continued to “transform itself” to adopt to “changes in society and the economy”.

“This partnership and investment is a clear demonstration of SMBC’s commitment to define the commercial banking model of the future and become the leading choice for businesses around the globe,” he said.

Toru Nakashima, SMBC chief financial officer, said the deal with OakNorth will bring a “high level of sophistication” to its decisions on lending.

SMBC’s investment into OakNorth followed on from IndiaBulls’ sale of the fintech’s stock at a 25pc discount. The Indian company has sold nearly 8pc of its stake in the business in two tranches for a combined sum of $145m (£111.8m), which values the business at around $2bn.

The valuation was considerably lower than the $2.8bn price tag put on OakNorth in its last funding round, when it raised $440m with Japanese investment giant Softbank leading the round.

At the time OakNorth said the price was determined by IndiaBulls and its buyers and that the business was “extremely well-capitalised”.

The London-based fintech is also a UK SME lender that typically provides loans of between £500,000 and £25m to small and medium businesses. The company, which was established four years ago, has profitably lent over £4bn to UK companies.

In August, OakNorth hired former Salesforce executive Peter Grant to lead its push into the US.

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