UK challenger bank Aldermore eyes $1.3 bln float-Reuters

(Reuters) – British lender Aldermore expects to be valued at about 800 million pounds ($1.3 billion) when it makes its market debut later this month, becoming the latest so-called “challenger” bank to list in London.

Industry sources said the sale, priced on Friday, was expected to attract domestic demand, but also interest from across the Atlantic. U.S. investors have been drawn to recent share sales by UK retail banks, looking for exposure to Britain’s economic recovery and anticipating that expected interest rate rises will improve banks’ profit margins.

Aldermore, founded in 2009 by former Barclays executive Philip Monks with backing from private equity firms AnaCap and Morgan Stanley Alternative Investment Partners, has established itself as one of the more credible newcomers trying to challenge Britain’s established banks.

It focuses on lending to small businesses and homeowners, and has picked up customers from larger banks which are downsizing and building capital to meet tougher rules from regulators.

The bank on Friday set a price range for its initial public offering of between 217 pence and 265 pence per share. At the top end of the range, the business would be valued at 870 million pounds.

The listing will raise around 300 million pounds, of which 75 million will come from new shares.

Aldermore will be the third British bank to float this year, following TSB and OneSavings. Earlier this week, Virgin Money said it intends to raise 150 million pounds through a listing later in October.

New banks, such as Aldermore, are seen to be unaffected by past misconduct issues which are impacting bigger rivals.

They also have the backing of Britain’s lawmakers and regulators, who are keen for competitors to challenge the country’s four top banks. Royal Bank of Scotland, Lloyds Banking Group, Barclays and HSBC provide over three-quarters of banking services to small firms.

Aldermore, which doesn’t have branches, made a pretax profit of 22.4 million pounds last year and said its lending had increased to over 4 billion pounds.

Final pricing is expected to be announced on or around Oct. 17, Aldermore said in a statement. Credit Suisse and Deutsche Bank are leading the listing, and Lazard is advising.