Zilch’s market position in the UK BNPL sector (2025‑2026)

Source: Zilch annual report 2025; FCA quarterly payments data.

Zilch has sustained double‑digit user growth while expanding its merchant network beyond fashion and tech into travel, home‑improvement and wellness. The platform’s “instant‑approve” model—leveraging machine‑learning credit scoring—remains a key differentiator against legacy banks and newer challenger BNPLs.

Recent funding rounds and valuation trajectory

• Series D (June 2024) – £200 m growth capital led by BlackRock and KKR,taking the post‑money valuation to £2.1 bn.
• Strategic bridge round (Oct 2025) – £50 m from existing investors to fund the “Deal‑Spree” acquisition pipeline; valuation held at £2.3 bn.

Thes injections have been earmarked for three core objectives:

1. Technology acquisition – adding AI‑driven risk models and real‑time fraud detection.
2. Geographic expansion – piloting a “Zilch Lite” offering in Ireland and the Netherlands.
3. Public‑market planning – securing advisory counsel, strengthening governance, and meeting FCA “Listing Ready” standards.

Deal‑making strategy: targets and rationale

Zilch’s M&A team has outlined a four‑pillar acquisition framework:

1. Credit‑scoring analytics – firms with proprietary choice‑data engines (e.g., PentaScore).
2. consumer‑engagement platforms – loyalty‑as‑a‑service providers that can embed Zilch’s checkout widget.
3. RegTech solutions – tools that automate FCA reporting and KYC/AML compliance.
4. Cross‑border payment gateways – to accelerate the planned EU roll‑out.

The approach balances organic growth (new merchant onboarding) with bolt‑on deals that shrink the time required to build in‑house capabilities.

Notable partnerships driving the deal‑spree

these collaborations not only expand Zilch’s product ecosystem but also create synergies that lower the acquisition cost of complementary startups.

Regulatory landscape and FCA compliance checklist

Zilch has focused on meeting the FCA’s “Consumer Credit Act” requirements while preparing for the Potential Listing Review (PLR). The compliance roadmap includes:

1. Enhanced affordability checks – using predictive income modeling to satisfy the FCA’s “fair lending” test.
2. Real‑time transaction monitoring – anti‑money‑laundering (AML) filters powered by chainalysis.
3. governance upgrades – appointing an independent audit committee and widening the board to include two FCA‑qualified directors.
4. Data‑privacy alignment – full GDPR compliance and participation in the UK‑EU data‑flow agreement.

Prosperous completion of these items is a prerequisite for the prospectus filing expected in Q1 2026.

IPO timeline and listing prospects

The use‑of‑proceeds narrative emphasizes: €150 m for acquisitions,€80 m for EU expansion,and €70 m for technology R&D.

Investor considerations and valuation metrics

• EV/EBITDA: Projected 2025 EBITDA of £210 m → implied EV/EBITDA ≈ 15.2× at a £3.2 bn valuation, comparable to peers ClearScore (15.8×) and affirm (14.9×).
• Revenue growth: 2024‑2025 CAGR of 27 % driven by merchant fees (2.5 % of transaction value) and interest margin (4.1 % APR on revolving credit).
• Retention rate: 89 % of active users remain after 12 months, outperforming the UK BNPL average of 80 %.
• Risk profile: Default rate held at 2.3 % (Q4 2025), down from 3.1 % in 2022 after the introduction of dynamic risk scoring.

Analysts from Barclays and Citi have upgraded Zilch to “Buy” with price targets ranging from £1.48 to £1.62,citing the deal‑spree pipeline as a catalyst for margin expansion.

Practical tips for stakeholders

For merchants considering Zilch integration

1. Map checkout flow – replace the final payment step with Zilch’s API to reduce cart abandonment by ~5 %.
2. Leverage promotional credit – offer “0 % intro APR for 30 days” to capture price‑sensitive shoppers.
3. Monitor real‑time reporting – use Zilch’s dashboard to track approved vs. declined rates and optimize product placement.

For investors evaluating the IPO

• Scrutinize the acquisition calendar – confirm that each announced target has signed a definitive agreement.
• Assess regulatory resilience – ensure the company’s FCA license is not subject to material breaches.
• Diversification of revenue – watch the proportion of earnings from non‑BNPL services (e.g., card interchange fees) growing above 20 % by 2027.

For talent looking to join Zilch

• Skill focus – expertise in AI‑driven credit modelling, cloud‑native payments infrastructure, and RegTech compliance is highly valued.
• Cultural fit – zilch promotes a “fast‑fail” ethos; candidates should demonstrate iterative product growth experience.

Real‑world example: Zilch’s partnership with ClearScore (2024)

• Objective: Reduce underwriting time and improve approval accuracy.
• Execution: Integrated ClearScore’s proprietary credit‑score API into Zilch’s instant‑approve engine.
• Result: Approval latency fell from 12 seconds to under 4 seconds, while the false‑positive rate (approved but later defaulted) dropped by 18 %.
• Strategic relevance: The partnership validated Zilch’s “tech‑first” acquisition thesis and positioned the company to absorb a similar credit‑analytics startup without extensive internal development.

Fast‑reference checklist for the “Deal‑Spree” phase

• Identify target – focus on AI credit, RegTech, cross‑border payments.
• Due‑diligence – evaluate data‑privacy compliance, existing FCA licences, and cultural alignment.
• Valuation model – apply a 2‑3 × revenue multiple for early‑stage fintechs, adjusting for synergies.
• Integration plan – allocate a dedicated 6‑month “post‑close” squad for API harmonisation and product rollout.
• Post‑deal KPI tracking – monitor incremental GMV, cost‑to‑serve reduction, and combined NPS.