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Challenger bank Shawbrook is urging its shareholders to hold tight as its directors look to fend off a takeover bid from a private equity consortium.

The lender, which specialises in serving small companies, rejected the offer last month which was led by private equity firms Pollen Street Capital and BC Partners, operating through a vehicle named Marlin Bidco. They offered 330p per share in cash, an increase on an original 307p per share offer made in mid-January.

On Tuesday it said it was sending a circular to its shareholders recommending that they “should take no action in relation to the Offer and should not sign any document sent by Marlin Bidco or its advisers.”

Shawbrook warned that the costs of dealing with the takeover offer would be around £4m “if the bid is aborted or unsuccessful” and between £9m and £12.5m if it succeeded, without providing further details.

Shawbrook also released a first quarter trading update on Tuesday which said that trading in the three months to the end of March had been in line with expectations. Loans increased 3 per cent to more than £4.2bn in the quarter. Shawbrook added it had received over 75 enquiries about its new interest-only mortgage aimed at those aged 55 and older.

Chief executive Steve Pateman said:

Shawbrook has continued to trade in line with management expectations…

We have continued to add products to our portfolio launching the ‘over 55 mortgage’, extending our Business Finance presence both in the UK and in Jersey, growing our Development Finance business and extending our network of relationships in Consumer with the addition of Confused.com. Further additions are on track for later in the year with Complex Mortgages and Motor Finance.

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