Investor becomes shareholder in Xinja Bank

Xinja Bank has announced that Dubai-based Emirates’ World Investments (WI) will invest $433 million in the neobank over the next 24 months, subject to relevant approvals.

WI will invest $160 million immediately, with the remaining $273 million available to be drawn down in multiple tranches as required to support Xinja Bank’s growth over the next two years.

WI will initially become a 20 per cent shareholder in Xinja Bank, with its stake likely to rise as the neobank draws down on the remaining funding over the two years. However, its stake is unlikely to exceed 40 per cent.

Xinja Bank founder and CEO Eric Wilson said he believed this was the largest single investment in an Australian neobank or start-up.

He said half of the investment would be used for engineers, technology, marketing and banking staff, while the other half will be held on the bank’s balance sheet as tier 1 regulatory capital.

WI CEO H.E. Zayed bin Rashid Al Qubaisi said: “We believe Xinja Bank is at the cutting edge of next-generation banking in Australia. Its technology, commitment to customers and ethical banking philosophy made it an obvious investment choice for us.”

WI is based in Dubai in the United Arab Emirates and is an investor in the banking industry around the world. It has equity holdings in banks across Europe, the Middle East, and now Australia.

The first round of the cash injection is subject to approvals from the regulatory authorities in the United Arab Emirates but will not require approvals from regulatory authorities in Australia.

Subsequent drawdowns will require approvals from the Australian Prudential Regulation Authority and the Foreign Investment Review Board.

Privately owned investment and corporate advisory firm First Penny Investments helped Xinja Bank secure the investment over two years of discussions.

Xinja Bank recently announced the launch of its series D capital raise, which it said was open to sophisticated or wholesale investors, to be made via the Equitise investment platform.

Earlier in March, the neobank reported it had so far raised around $70 million in capital from Australian and offshore investors, through its series A, B, C and the first 40 per cent of series D funding rounds.

This included two equity crowdfunding rounds, the first held in January 2018 and the second in January 2019, both of which were also in partnership with Equitise.

The neobank also recently ceased offering its savings product to new customers in an effort to ease funding pressures and preserve its savings rate.

Mr Wilson said the investment by WI will not influence this decision, with the savings product remaining closed.

He added the neobank would most likely open the deposit account again when it launches its home loan and personal loans products.

Xinja Bank is due to launch personal loans around June or July and home loans in November or December. However, Mr Wilson said this could change depending on the impact of the coronavirus pandemic on the state of the economy in Australia.

Xinja Bank launched in May 2017 and now has more than 45,000 accounts and more than $450 million in deposits.

[Related: New bank outlines support of broker channel]

Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.

Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.