US financial services specialist private equity firm Estancia Capital Partners has acquired a minority stake in UK savings fintech Flagstone via a £108m ($138m) equity investment.
The transaction, which combines primary and secondary investments, will see Estancia’s Co-Founder and Managing Director Takashi Moriuchi and Vice President Keegan Mitchell joining Flagstone’s board of directors, while Darrin Jeffries, COO and Managing Director at Estancia, will be a Board Observer.
According to a press release, the primary investment will be used to consolidate the fintech’s position in the cash deposit market, build greater brand awareness and strengthen partnerships. The secondary investment will enable Flagstone’s earliest backers to realise a return on their investments. The transaction is expected to close in Q2 2024 after receipt of necessary regulatory approvals.
Flagstone was founded in 2015 by Andrew Thatcher and Simon Merchant as a one-stop platform for individuals to access and maintain multiple cash savings accounts; its services now extend to small and medium-sized enterprises (SMEs), charities and financial services providers including Saga and Revolut. The fintech also partners with wealth management firms such as St James’s Place.
Flagstone describes itself as the largest UK cash savings platform in the UK’s £1.7tn savings market, based on the number of banks and savings accounts on its platform. The company has over 600,000 customers and its total AUA exceeds £11bn, increasing by more than £1bn per quarter in 2023. Its first quarter of profitability was recorded in December 2022.
In a statement, Moriuchi said: “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.
“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.”
Jeffries and Mitchell added: “Our partnership with Flagstone is an all-around winning combination, as we see many parallels with our two most recent successful investments in the US deposit marketplace, R&T Deposit Solutions and PMA Financial Network. Flagstone’s success since launching in 2015 is already impressive. However, in-depth industry research indicates that the growth opportunities remain vast providing Estancia with an excellent opportunity to assist accelerating their growth to an even more exciting level.”
Flagstone was advised by Houlihan Lokey and CMS. Estancia was advised by Jefferies and Dechert.
