Pollen Street’s Shawbrook prices IPO

Shawbrook, a UK specialist lending and savings bank, owned by UK-based Pollen Street Capital, has priced is listing on the London Stock Exchange at 290 pence per share, giving it a market capitalisation of £725 million (€997 million, $1.07 billion).

The offer is expected to raise gross proceeds of approximately £90 million for the company, which the business will use to support prudent capital ratios as well as to support further controlled growth within Shawbrook’s existing market segments and possible expansion into new market sectors.

Shawbrook provides loans to UK small and medium-sized businesses and consumers in sectors that are often poorly served by the large high street banks. The group operates five lending divisions; commercial mortgages, asset finance, business credit, secured lending and consumer lending. It lends to more than 60,000 small and medium-sized businesses and consumers in the UK.

Pollen Street’s Special Opportunities Fund, a £1.1 billion vehicle that made the initial investment, will continue to hold 59 percent of the company’s shares.

“Our focus remains on providing UK customers with a fresh, pragmatic approach to lending and savings whilst driving further growth by maximising opportunities in existing markets, capitalising on the embedded growth in our current loan book and developing a range of products to facilitate expansion into adjacent segments,” Richard Pyman, chief executive officer of Shawbrook, said in a statement.

Pollen Street, which targets investments in the UK’s financial services sector, invested in Shawbrook when the team – then called SOF Investments – was still part of Royal Bank of Scotland managing the RBS Special Opportunities Fund. The team, which spun out from RBS in November 2013 is currently managing a £300 million fund which it raised in 2014 to acquire four assets from that fund.

As well as Shawbrook, the portfolio also includes Target Group, a software provider for financial services businesses, and Banca Sistema, an Italian bank. Pollen Street’s recent fund can only be used for further investments in these assets and cannot make new investments from this vehicle.

The firm’s most recent transactions include the sale of Moneycorp to Bridgepoint in an exit worth £212 million, and the add-on acquisition of Freedom Finance, an unsecured lending broker in the UK by its portfolio company Target Group.

Pollen Street, which is led by Lindsey McMurray, will be keen to return capital to investors since the team is currently in market attempting to raise £350 million for its next financial services-focused fund, PEI revealed in January.

Pollen Street would typically invest in businesses with an operational value of between £200 million and £500 million, writing equity tickets of between £20 million and £70 million.