Judo Bank valued at $1.9bn after equity raise

The small-to-medium enterprise (SME) challenger bank has also announced an inaugural tier 2 issue of $50 million.

According to Judo Bank co-founder David Hornery, the latest equity funding round has valued Judo Bank at more than $1.9 billion on a fully diluted post-money basis, a 19 per cent premium to Judo Bank’s post-money valuation following round 4 of the equity raise six months earlier.

Noting that the latest equity round was completed in “record time”, with support from existing shareholders, Mr Hornery said: “The funding round is a testament to the ongoing support Judo receives from the investment community, with 14 of our top 20 investors participating, and the majority taking above their pro-rata entitlements.”

Judo co-founder and CEO, Joseph Healy, said the additional capital would supplement Judo’s lending and deposit growth, particularly since the beginning of the coronavirus pandemic.

He added that May 2021 was Judo’s largest month of loan originations since launching, while lender’s loan book is currently over $3.3 billion, with a pipeline of lending of $2.5 billion.

“Judo has a proven track record of growth and importantly is now generating cash profits – one of the very few new banks anywhere in the world to have achieved profitability within three years of launching,” Mr Healy said.

“We have stepped up our support for Australian SMEs during the COVID period, growing business lending by more than 100 per cent since March last year, based on APRA figures.

“Over this period, Judo was Australia’s third largest bank lender to the business sector, by net lending growth, and completion of our latest capital raising places us well to continue that growth as Australian SMEs seek funding to grow their businesses during the post-COVID economic recovery.

“Importantly, this recent capital raising allows us to continue to support thousands of Australian SMEs, whose needs have long been ignored by the major banks.”

Judo deputy CEO and chief financial officer Chris Bayliss said that Judo has now raised $1.2 billion in equity capital from a diverse portfolio of domestic and international investors.

He said: “The foundations for Judo are now well-established, and shareholders will benefit as the business continues on its rapid growth trajectory and Judo begins to generate its own organic capital.

“In addition to our round 5 equity raise, today we announce an inaugural tier 2 issue, raising $50 million in regulatory capital.

“The execution of a tier 2 transaction adds efficiency and diversification to our capital structure, and is further validation of our business model, with strong participation from a small group of leading Australian fixed-income institutional investors.”

Judo Bank was officially launched in 2018 by a group of former National Australia Bank (NAB) executives in 2018, including co-founders Joseph Healy, David Hornery, Alex Twigg, Tim Alexander, Chris Bayliss and Jacqui Colwell.

The bank, which launched as Judo Capital, became an authorised deposit-taking institution in 2019 after the Australian Prudential Regulation Authority approved its banking licence.

Judo Bank recently announced changes to its leadership, moving from a dual CEO model to having a single CEO.

While Mr Healy has become the CEO of the bank, Mr Hornery has transitioned to a non-executive director role of the Judo board. Mr Hornery has continued to support the management team during his transition to the board.

[Related: SME funding gap jumps 5%: Judo]