Irish specialist business lender Capitalflow has been acquired by Dutch challenger bank bunq.
Established in 2016 and led by chief executive Ronan Horgan, Capitalflow provides flexible finance options through its digital platform to firms looking to grow and scale their business.
The Dublin based company, backed by British private equity firm Pollen Street Capital, employs around 60 people and has lent over €650m to a broad range of small and medium sized businesses (SMEs) across a range of sectors.
Following the takeover, Capitalflow plans to advance over €1.2 billion in new lending over the next three years to Irish SMEs and property investors.
It is also expects to be able to offer more competitive rates to customers here as well as grow the range of products it can offer amid rising demand.
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"From Capitalflow's perspective we become a wholly owned subsidiary of bunq and we can avail of its competitive funding through its deposit base," said Mr Horgan.
"Our intention is to scale our business over the coming years and be a credible alternative business lender to the pillar banks."
"We have invested heavily in a digital platform over the past 18 months that will allow us to scale, and we hope in time to add further products in time."
Capitalflow had its best months since its establishment in May and June of this year as the economy started to reopen.
The takeover by bunq follows interest from a number of potential suitors over the past six months, Mr Horgan said.
"Bunq bank launched in 2015 and it has grown its deposit base to over €1 billion," he said.
"Unlike other digital banks, bunq charges its customers for the use of its services so it has taken a different route to market than most of the others by charging a premium for its products and services."
Pollen Street Capital will becomes a shareholder in bunq following the deal.
The news of the takeover came as bunq reported its first ever profitable month.
It now expects to break even on a monthly basis by the of this year.
Bunq also raised €193m in a deal with Pollen Street Capital, valuing it at €1.6 billion – the largest Series A round ever raised by a European fintech.
Capitalflow's focus is SME lending but with access to more funding, Mr Horgan said it will look to diversify and offer more services in future.
"Bunq have really ambitious plans for Europe. They operate in 30 different countries. They have international expansion plans as well so we will work with them, we will see what the demand is here."
The lender said it is seeing a K-shaped recovery in the economy with demand for credit coming from all sectors, particularly construction, property investment, manufacturing, medical supplies, "and even in your local retail stores are doing well".
Mr Horgan said the tourism and leisure sectors are challenged, but Capitalflow has approved over €10m in facilities for pubs, hotels and restaurants in recent months.
"The reason for that is we think they are well located, we think there is strong demand for their services and they are backed by experienced promoters which is key to any business."
He said he expects these sectors to recover quite a bit as tourists come back into the country in 2022.
