Flagstone, a leading UK-based cash deposit platform, announced a £108 million ($138 million) equity investment from Estancia Capital Partners. Estancia is a US financial services specialist and private equity firm with expertise in cash management. As part of the deal, Estancia will take a minority stake in the Flagstone business.
In connection with the investment, Estancia’s Takashi Moriuchi and Keegan Mitchell will join Flagstone’s Board of Directors, and Darrin Jeffries will be a Board Observer. After receiving the necessary regulatory approvals, the deal is expected to close in the second quarter of 2024.
Founded by Andrew Thatcher and Simon Merchant in 2015, Flagstone aims to create a service-driven fintech platform that helps UK savers make their money work better. By the number of banks and savings accounts on its panel, Flagstone is the largest UK cash savings platform. Individual savers, small and medium-sized enterprises (SMEs), and charities using Flagstone can access over 200 savings account offerings available through 60 of the UK’s leading cash savings providers.
With a customer base of over 600,000, Flagstone’s total Assets under Administration (AUA) now stand at over £11 billion. And the company’s AUA increased by over £1 billion per quarter last year as more personal and business savers looked to maximize the interest earned on their cash. They also have the option to benefit from the security of FSCS protection.
In December 2022, Flagstone recorded its first quarter of profitability, and the company has been achieving accelerating quarterly profitability ever since.
Built as a platform for individual savers to access and maintain multiple cash savings accounts in one place, Flagstone now provides white-label and API-integrated capabilities for businesses to offer their customers easy-to-use and competitive savings options. And Flagstone works with many of the UK’s leading wealth management firms such as St. James’s Place and powers a range of savings products at financial services providers like Saga and Revolut.
This deal combines primary and secondary investments. The primary investment will consolidate Flagstone’s position in the cash deposit market, build better brand awareness, double down on partnerships, and offer better competitive savings products with premium customer service. The secondary investment will reward Flagstone’s earliest backers, enabling them to realize a significant return on their investments.
Houlihan Lokey and CMS LLP advised Flagstone on the transaction. Jefferies LLC and Dechert LLP advised Estancia.
KEY QUOTES:
“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.”
- Simon Merchant, Co-Founder and CEO of Flagstone
“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 by providing an easy to use platform, excellent array of cash management solutions across yield and maturity options and industry leading levels of service that clients value.”
- Takashi Moriuchi, Co-Founder & Managing Director of Estancia
“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, our in-depth industry research indicates that the growth opportunities remain vast providing an excellent opportunity for Estancia to assist accelerate their growth to an even more exciting level.”
- Darrin Jeffries, COO & Managing Director, and Keegan Mitchell, Vice President at Estancia
“As we mark this important milestone, we are delighted to work with an investment team with the track record and international expertise that Estancia brings. It is evident that the market opportunity is significant for our business on a global scale, and we are excited to take advantage of that and move our business on to the next stage.”
- Andrew Thatcher, Co-Founder and CEO of Flagstone International
