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Private equity firms offer to buy Shawbrook bank in $1 billion deal
March 3, 2017 / 4:57 PM / 9 months ago

Private equity firms offer to buy Shawbrook bank in $1 billion deal

LONDON (Reuters) - British bank Shawbrook Group Plc SHAW.L said on Friday it has received a joint offer from two private equity firms to buy the lender less than two years since it went public, in a deal worth 825 million pounds ($1 billion).

Pollen Street Capital, which already owns 38.9 percent of Shawbrook, together with BC Partners have offered shareholders 330 pence per ordinary share in cash and any final dividend due for 2016, the bank said in a statement.

The shares jumped 18 percent to 316.5 pence on Friday.

The offer is pitched at a 22 percent premium to Thursday’s closing share price.

Britain’s so-called challenger banks have been increasingly seen as ripe for takeovers in recent months, bankers who advise on mergers and acquisitions have said, as a prolonged period of low interest rates has squeezed earnings and the pound’s fall has made them cheaper for foreign buyers.

Co-Operative Bank, rescued from the brink of collapse by a group of hedge funds in 2013, put itself up for sale last month after struggling to meet regulatory capital requirements.

Shawbrook, which was founded in 2011, listed in April 2015 at 290 pence a share but has been trading below that price in recent months.

”In its short history as a listed company, Shawbrook has suffered from a disproportionate amount of ‘management churn,’” Ian Gordon, analyst at Investec wrote in February.

Following the disclosure of an impairment charge in June 2016, Chief Financial Officer Tom Wood resigned and Dylan Minto took over the role.

“We believe that Shawbrook continues to suffer an unwarranted discount in the aftermath of the 9 million pound impairment charge taken by its asset finance business in Q2 2016,” Gordon wrote.

Shawbrook had already seen a change at the top the previous year, when Steve Pateman replaced Richard Pyman as CEO.

The bank, with a 75 percent exposure to small and medium sized firms (SMEs) lending, said in November that demand from SMEs was lower than the previous year but that it had seen continued demand for property finance and consumer loans.

Shawbrook is being advised by Goldman Sachs (GS.N) and is due to report full-year results on March 7.

Additional reporting By Andrew MacAskill, editing by Elaine Hardcastle

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