Advisers rush to save £800m banking float

Tim Wallace
Follow Tim
Aldermore CEO Phillip Monks
CHALLENGER bank Aldermore is locked in a race against time to get its stock market flotation away, as it battles to offload shares to US investors and include existing shareholders in the free float of the business.

Bankers working on the deal have been in New York in a last ditch effort to sell the stock as a bet on the UK’s growth story.

But despite the rapid growth of Aldermore and the healthy state of the British economy, the bookbuilders are still awaiting orders from the American institutions.

If those sales do not materialise, the bank could have to cut the price sharply or even cancel the flotation.

The advisers returned from the US over the weekend and hope to garner enough orders today to keep the IPO on track to price this week.

One factor holding the bank back is the existence of major investors in its stock already.

Toscafund plans to increase its shareholding, buying new shares. But it will own more than five per cent of the bank, meaning its investment does not count towards the 25 per cent free-float required by listing rules.

As a result Aldermore has to find more investors to buy into the stock.

A boost comes from Lansdowne – it plans to maintain or even increase its stake, but will stay just below five per cent. That means the bookrunners need to sell around 21 per cent to complete the free float.

The flood of IPOs since the beginning of the year has sated many investors’ appetites, and they are now less willing to invest in new stocks, slowing Aldermore’s process in selling £300m of shares, including £75m of newly issued stock. Virgin Money is also looking to float.

Aldermore hopes to finalise the book this week and price the deal on Friday.