Small business challenger bank Judo raises $140 million

Small business challenger bank Judo Capital has raised $140 million from investors to  tap into the shortfall in lending to small and medium-sized businesses.

Judo co-founders David Hornery (left) and Joseph Healy. Healy is the former head of NAB business banking.

Photo: Elke Meitzel

Investors in its first equity round include the Ontario Pension Trust, Abu Dhabi Capital Group, Credit Suisse Asset Management and Myer Family Investments.

Co-founder and joint chief executive of Judo, Joseph Healy, told Fairfax Media there was significant demand for equity the bank was unable to accommodate.

"We are thrilled and actually we could have raised more than that in our first round, there was about $35 million we decided we didn't need at this stage," he said. "This will help realise our dream of building a strong challenger bank in Australia."

Mr Healy said after 12 weeks in business Judo's pipeline of lending is close to $80 million and it has loaned out about $25 million.

He said market demand for an alternative to the big four banks had become stronger in recent months.

"The royal commission has helped enormously but the dissatisfaction with big banks amongst small business has been evident in the market for a long time," he said. "This is emphatically not a fintech, it is a return to old-fashioned banking."

Around 15 per cent of its business is unsecured lending.

"We have not put a value on the company but obviously when you raise $140 million that is an initial valuation," Mr Healy said. "We are confident that we can build a company in three years that is worth at least $1.5 billion."

Headquartered in Melbourne with a team of close to 50, Judo plans to go nationwide in the coming months and is expecting to finalise its full banking licence by the end of the year.

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