Fresh from securing £220 million in a pre-IPO round in October, digital bank and loans provider Zopa has swooped up its UK counterpart DivideBuy, a BNPL finance provider that specialises in offering installment plans from physical retail stores.
Zopa and DivideBuy will combine resources to offer increased credit limits of up to £30,000 for BNPL transactions.
The transaction, Zopa's first acquisition deal, is expected to grow its revenue by at least 20% after closing, with completion due in coming months.
It follows a £220 million round led by Softbank's Vision Fund, raised with a view to a listing of Zopa's shares.
Founded in 2005, Zopa started out as a peer-to-peer lending company but entered fresh waters in 2020 with a move into the digital banking space. Customer deposits held with Zopa amount to around £3 billion and it has £2 billion in loans on its balance sheet.
DivideBuy's retail BNPL business is made possible because it supplies physical point-of-sale terminals, with embedded support for immediate lending agreements. The BNPL agreements themselves allow customers to repay in two-to-12 months and currently are used by over 400 merchants.
Jaidev Janardana, CEO, Zopa, said he expected the acquisition to lead to an evolution in its existing BNPL platform, terming the move "BNPL 2.0". Its lending book should benefit from strengthened credit checks to gauge BNPL affordability depending on the customer's specific circumstances, along with purpose-built software to help customers make repayments.
Janardana commented: "This acquisition helps us bring to life BNPL 2.0, an evolution of BNPL which we believe delivers the easy, integrated product which customers love whilst also addressing some of the issues around affordability and responsible lending which have plagued the sector.
"We are proud to be entering the POS space with DivideBuy, a market-leader with a standout product and technology stack, and a culture that is closely aligned to our values of fairness and customer-centricity".
Robert Flowers, CEO at Divide Buy, added: "We were delighted to be approached by Zopa in its search for a POS finance provider to support its vision of building Britain's best bank. DivideBuy's product, technology and culture align perfectly with Zopa's values and brand strength, making this an ideal fit for the future of lending.
Our LendTech solution will enable Zopa to leverage its core lending capabilities and build a market-leading POS finance solution.