Warburg Pincus-backed Varo Bank raises fresh capital at $2.5 bln valuation

Four thousand U.S. dollars are counted out by a banker counting currency at a bank in Westminster, Colorado November 3, 2009. REUTERS/Rick Wilking/File Photo

Sept 9 (Reuters) - Varo Bank, backed by private equity firm Warburg Pincus, said on Thursday it had raised $510 million in a funding round led by new investor Lone Pine Capital, taking the nationally chartered U.S. digital bank's valuation to $2.5 billion.

The Series E funding round included new investors Eldridge, Marshall Wace, Declaration Partners and funds and accounts managed by BlackRock, as well as existing ones like The Rise Fund and Gallatin Point Capital.

The fintech company said it would use the funds raised to grow its customer base and invest in product and technology innovation. It has raised $992.4 million since its inception.

Register now for FREE unlimited access to Reuters.com

Launched in 2017, Varo offers high-interest savings accounts and premium bank accounts with no minimum balance requirements, monthly account fees or overdraft fees.

Its products include Varo Advance, which allows qualifying customers to obtain a credit of up to $100 in seconds on its mobile app and Varo Believe, an upcoming credit card program with a flexible security deposit and zero fees.

Varo said its current valuation had increased by five times since May last year. It added that revenue had tripled in the last 13 months since it obtained a bank charter, while the number of accounts had grown to four million.

Nationally chartered banks in the United States, whose primary roles are to lend money and accept deposits, are regulated by the Office of the Comptroller of Currency.

Register now for FREE unlimited access to Reuters.com
Reporting by Sohini Podder in Bengaluru and Anna Irrera in London; Editing by Ramakrishnan M.

Our Standards: The Thomson Reuters Trust Principles.