The digital bank is on course to notch its first full year in profit.

U.K.-based neobank Starling Bank announced on Monday its £272 million ($376 million) Series D funding round led by Fidelity Management & Research Company, alongside Qatar Investment Authority, RPMI Railpen, the investment manager for the £31 billion Railways Pension Scheme, and the global investment firm Millennium Management. (Finovate)

The company confirmed in a statement that it secured the funds at a pre-money valuation of £1.1 billion.

Profitable challenger bank

Starling Bank also announced several positive metrics on its growth and profitability. Its gross lending has now topped £2 billion, while deposits exceed £5.4 billion. Since its launch in 2017, the bank has opened more than two million accounts, including more than 300,000 small business accounts.

It also was voted Best British Bank in 2018, 2019, and 2020.

In January, the bank grew its year-on-year revenue by about 400% to £12 million, also doubling its account numbers to more than two million.

It generated a positive operating profit for a fourth consecutive month. Net income now exceeds £1.5 million per month.

Starling expects to clock its first full year in profitability by the end of its next financial year-end.

Investor profile

Anne Boden, founder and CEO of the bank said to Sifted it was significant that the Railways Pension fund had invested in the bank.

“They’re not VCs,” she said of pensions. “These are investors that invest in real solid numbers and real solid growth.”

Separately, overseas billionaire Harald McPike, who funded Starling for a large part previously, will cash out some of his holdings in the new round once it receives regulatory clearance.

McPike will cut his stake in Starling to a little less than 40%.

Use of funds

Starling will use the funds to further boost its growth, primarily by expanding its U.K. lending activities, as well as for “anticipated M&A.”

According to CNBC,  Boden said in an interview last year that “we are probably going to acquire something during 2021.”

“Lots of lenders are going to reevaluate their future and we are growing very, very fast,” she added. “We’re always looking for opportunities.”

Starling is also charting a European expansion.

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