UK cash deposit platform, Flagstone, has received a £108m equity investment from US private equity firm, Estancia Capital Partners.
Under the terms of the deal, Estancia takes a minority stake in the Flagstone business.
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Flagstone launched in 2015 to create a service-driven fintech platform that helps UK savers make their money work harder. Today, Flagstone is the largest UK cash savings platform by the number of banks and savings accounts on its panel. Individual savers, small and medium-sized enterprises (SMEs) and charities using Flagstone either directly or through multiple fintech platforms, financial advisers or brand partnerships.
Access to 200+ savings accounts from 60 UK savings providers
They can access over 200 savings account offerings available from 60 of the UK’s leading cash savings providers. This incorporates the largest incumbent banks to the challenger sector.
Serving a customer base of over 600,000, Flagstone’s total Assets under Administration (AUA) now stand at more than £11bn. The company’s AUA increased by more than £1bn per quarter in 2023.
Flagstone recorded its first quarter of profitability in December 2022. It has maintained accelerating quarterly profitability ever since. Flagstone provides seamless cash solutions to the UK’s undisrupted £1.7trn savings market. £1.1trn of these funds are held in accounts earning 2% or less per annum.
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By GlobalDataOnly 23% of UK savers switch to earn more interest
Moreover, in the first half of 2023, only 23% of UK savers switched accounts to earn more interest. Conversely, the average Flagstone customer has five accounts and actively manages their savings by reinvesting seven times a year.
Simon Merchant, Co-Founder and CEO of Flagstone, said: “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. 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 & MD, Estancia, added: “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. It provides 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.”
Flagstone: from a single platform to white-label and API-integrated solutions
Flagstone launched initially as a platform for individual savers to access and maintain multiple cash savings accounts in one place. It now provides white-label and API-integrated capabilities for businesses to offer their customers easy-to-use, adaptable, and competitive savings options.
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 rewards Flagstone’s earliest backers, enabling them to realise a significant return on their investments.
The transaction is expected to close in the second quarter of 2024 after receipt of necessary regulatory approvals.
