Australian SME-focused challenger bank, Judo, joins an exclusive local unicorns’ club

Judo Bank, an Australian bank has a mission to make it easier for Australian SME businesses to get funding starting from $250,000. The bank offers business loans, lines of credit, equipment loans, and finance lease. It announced Thursday its third equity funding round of $250 million at a post-money valuation of well over $1 billion.

Judo did not release details of its latest valuation. (CROWDFUND INSIDER)

Judo Bank now has the distinction of becoming the second Australian fintech to turn unicorn after Airwallex, a cross-border foreign exchange service.

Moreover, Judo Bank is also the first of the new class of the Australian digital neo banks to achieve the hallowed unicorn status.

Investing participants

The company raised $400 million in its previous funding round held in the middle of last year.  It was the biggest ever single funding round in Australian history.

Only existing shareholders participated in the latest round. These included Bain CapitalCredit, Myer Family Investments, the Abu Dhabi Capital Group, Ironbridge, SPF Investment Management, OPTrust, and Tikehau Capital.

On a cumulative basis, Judo Bank has now raised $770 million.

In addition to equity funding, the digital bank has garnered $ 800 million in debt funding from the larger investment banks such as Citi (NYSE: CITI), Goldman Sachs (NYSE: GS) and Credit Suisse (NYSE: CS).

Judo also drew $500 million from the federal government through the Australian business securitization fund and structured financial support fund.

“The support we’ve received for our third round, at an increased valuation to our second round capital raise last year, underscores the confidence and commitment our existing investors have in Judo, particularly at a time of extreme volatility in global markets, that has impacted all bank valuations,” said co-founder David Hornery.

Judo Bank operations

Hornery said he expected the bank to become profitable in the “very near-term,” though it expected higher loan provisioning due to the COVID-19 crisis.

However, he clarified that a very substantial proportion of the bank’s loans were holding up well. Personalized interaction between Judo and its customers plays an important role here, he emphasized.

Additionally, he revealed that the bank had “one of the strongest capitalized tier-1 ratios in the country.”

Former bankers David Hornery and Joseph Healy founded Judo Bank in 2015. It received its full banking license in April last year.

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