Starling’s Leading Investor Retracts Support for London IPO
Starling Bank is facing significant challenges as its leading investor retracts support for a London initial public offering (IPO). This shift in direction raises concerns about the fintech’s potential move to the United States for its much-anticipated IPO.
Investor’s Changing Outlook on London IPO
Harald McPike, a billionaire investor, initially advocated for Starling to launch its IPO in London. However, frustrations regarding regulatory reforms have changed his position. McPike has indicated that progress must accelerate, or he may withdraw support altogether.
In 2016, McPike made a pivotal investment of $70 million in Starling. According to Companies House records from February 2025, he holds a roughly one-third stake in the bank. Despite his previous intentions, he now believes that Starling is leaning towards a U.S. listing.
Change in Starling’s IPO Strategy
Over the past year, Starling’s executives have exhibited a shift in language regarding their IPO plans. Declan Ferguson, the bank’s financial chief, stated last summer that there was no definitive plan for the listing destination. He described the situation as “in flux.” This marks a departure from earlier statements by interim chief John Mountain, who expressed strong commitment to a London listing.
In January, CEO Raman Bhatia was non-committal about the listing venue, stressing that shareholders would ultimately decide the timing and location. “We have not concluded on that,” he stated.
Regulatory Challenges Facing Starling
McPike’s regulatory frustrations highlight ongoing issues within the UK banking landscape. Despite efforts from the Treasury to make London a more attractive location for tech-scale-ups, many believe reform efforts have not gone far enough.
The Bank of England had raised the minimum capital requirements for lenders last year, which many expected to benefit mid-sized banks. However, McPike argues that the increase from £20 billion to £40 billion fails to significantly alter the competitive landscape.
Concerns with Regulatory Compliance
Starling faced significant regulatory hurdles in the past year, including a £29 million fine due to inadequate financial controls. The bank also reported substantial losses related to the COVID loan scheme, which allowed businesses to borrow up to 25% of their annual turnover. Starling took a 25% hit in profits after opting to decline £28 million of government loan guarantees.
Critics have accused Starling of misusing the scheme for marketing gains. In response, Bhatia dismissed these claims as “utter nonsense.”
Future Directions and Focus
In light of McPike’s shifting stance, Starling has emphasized its commitment to a growth strategy rather than pinning down the specifics of an IPO. A company spokesperson stated, “We are focused on the execution of our growth strategy rather than on the timing or location of an initial public offering.”
As they navigate these tumultuous waters, Starling is examining the potential impacts of evolving regulations on their business strategy. The coming months will be crucial as they determine the best path forward regarding their IPO and expansion efforts in the U.S.
