London fintech Zopa returns to P2P lending market as losses narrow


Zopa has quietly re-entered the peer-to-peer lending market where it originally made its name after ditching its P2P subsidiary last year, the Standard can reveal.

The London fintech said it had acquired a £41 million loan portfolio in March from an investor in its former P2P lending business for a cash consideration of £38 million.

Zopa, which began operations as the first peer-to-peer lender in 2005, decided to exit the market at the end of 2021 after the UK financial watchdog began a crackdown on lenders, citing concerns over a gap in protections for customers taking out finance products through loan-based crowdfunding. The firm sold its P2P subsidiary in February 2022 and it was subsequently renamed to Plata Finance.

Zopa CEO Jaidev Janardana said: “As people in the UK navigate through the cost-of-living crisis and rising interest rates, Zopa’s proposition becomes ever more relevant.

“For borrowers seeking fairly priced and responsible credit or savers seeking to find the right balance between returns and access, Zopa Bank offers a superior alternative to the incumbents.”

A Zopa spokesperson added that the company had no plans to issue new P2P loans to customers.

It comes as losses at Zopa narrowed to £24 million in 2022 as the fintech unicorn marked the next step on its path to profitability.

The firm’s loan book swelled 65% to just under £2 billion in the year, accounts field with Companies House today show, while customer deposits more than trebled to £2.9 billion.

But allowances for expected credit losses jumped more than 150% from just over £50 million to over £131 million as customers on squeezed incomes struggled to repay debt amid rising interest rates.

The company, which offers customer bank accounts as well as Buy Now, Pay Later credit, last year bucked the layoff trend in the fintech sector by increasing its headcount 29% to 600 staff.

Janardana told the Standard: “For the majority of fintechs, the philosophy was raising a lot of capital and using that to grow in the hope of being profitable some day in the future.

“In a world where there was an abundance of capital and interest rates were low that seemed like a good approach…[but] for us the profitability horizon was never too far away -- we have taken a prudent approach to growth and haven’t overhired in the way others have done.”

The SoftBank-backed company, which achieved a valuation of over $1 billion after a $300 million funding round in 2021, had delayed its plans for an IPO by the end of 2022, instead opting to raise a further £75 million privately earlier this year. The company has not abandoned plans for IPO but has not laid out a new timeline.