OneSavings Bank has announced plans to list on the London Stock Exchange and raise £41m, in the first of a series of flotations by “challenger” banks seeking to raise money and compete with established high street lenders.
The bank was created in 2010 when the Kent Reliance building society was rescued by a £50m cash injection from private equity group JC Flowers. When it floats in June, it will become the first British bank to come to London’s main market for more than a decade.*
OneSavings is expected to achieve a market capitalisation in the range of £500m-£600m, according to analysts, which would take it to the brink of the FTSE 250 index.
JC Flowers, which now controls more than 90 per cent of the economic interest in the company, is expected to retain a stake of about 30-50 per cent after the listing.
OneSavings is the first of a number of new retail banks due to float on the stock market this year, which include so-called challenger brands currently controlled by larger groups, such as Santander UK, Royal Bank of Scotland’s Williams & Glyn’s, and Lloyds Banking Group’s TSB business. TSB is set to announce details of its initial public offering within the next two months.
Other potential listings include private-equity backed challengers Aldermore and Shawbrook, as well as more high-profile high-street lenders such as Metro Bank and Co-op Bank.
Secure Trust Bank, the niche retail lending arm of Arbuthnot, floated on the London’s Alternative Investment Market in 2011.
Chatham-based OneSavings is seeking to raise around £41m through its IPO, which will be offered only to institutional investors and will comprise both new shares and a selling down of JC Flowers’ existing stake.
The bank – which trades under the Kent Reliance, Interbay, Prestige and Heritable brands in the UK and also has operations in the Channel Islands – reported a pre-tax profit of £31.4m in 2013, compared with £8.1m in 2012.
“We have made enormous progress since the bank was created three years ago,” said Andy Golding, the chief executive who joined OneSavings in 2012. “We have a deep understanding of our markets and are confident we can continue to grow using our specialist, flexible and personal approach to lending and saving.”
JC Flowers had planned to use OneSavings as a vehicle to buy other struggling building societies and, in 2010, made a bid for Williams & Glyn’s. Mr Golding said OneSavings was “still actively looking” for potential acquisitions.
“A stock exchange listing is the next natural step in the evolution of the business, providing us with access to the capital markets to enable us to invest for future growth.”
Barclays is global co-ordinator of the IPO, as well as sponsor and joint bookrunner alongside Canaccord Genuity and RBC Europe. Macquarie Capital is co-lead manager. Rothschild is acting as financial adviser to OneSavings Bank and JC Flowers.
*This article has been amended since publication to reflect the fact that the Nottingham Building Society did not float on the London Stock Exchange in 2001, but instead listed permanent interest-bearing shares.