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This firm has just raised £400m to invest in financial services businesses

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Pollen Street Capital, the private equity firm which won shareholder approval to take over challenger bank Shawbrook last year, has raised a new £400m fund to invest in financial services businesses.

The firm's third fund, which was initially targeting £350m, has already spend 53 per cent of the total on deals including Shawbrook, direct lending business 1st Stop Group, and specialist insurance broker Miles Smith.

It is one of a number of private equity firms choosing to focus on the financial services space, as fintech – or financial technology – is booming. London-based peer AnaCap has been in the sphere since 2005, while Pollen Street is a relative newcomer having been founded in 2013 when Lindsey McMurray led a spin-out from Royal Bank of Scotland (RBS).

Read more: Victorious private equity consortium wins shareholder approval to take over Shawbrook bank

“We are fortunate to have a high-quality set of investors and we very much appreciate their support in making this a successful fundraising. We are committed to earning their continued support by maintaining a focus on value creation,” said Pollen Street Capital's head of fundraising Magnus Christensson.

Pollen Street focuses on lower mid-market business, which is still a thriving sector in the UK. A record amount of money was invested in UK startups last year – especially fintech firms, which should provide a significant pipeline of opportunities for companies such as Pollen Street further down the line. Meanwhile the UK helped to drive a record year of fintech mergers and acquisitions in 2017.

Read more: UK fintech VC investment hit a record in 2017 as China falls behind

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