Hedge fund pair bet on British bank Aldermore
Two leading hedge funds have invested in Aldermore, a small bank that launched in the UK in 2009, in the latest sign of growing investor appetite for British lenders.
Toscafund and Lansdowne Partners have injected £40m of fresh capital into the bank, helping to fuel its growth in retail and small business lending ahead of a potential stock market listing later this year.
Aldermore said the deal would “establish a wider dialogue with UK institutional investors as the bank continues to review its capital markets strategy which may, among other strategies, include an initial public offering.”
As one of the biggest investors in Lloyds Banking Group, Lansdowne has been bullish on the prospects for UK banking. Meanwhile, Toscafund is chaired by Sir George Mathewson, former chief executive of Royal Bank of Scotland.
The outlook for UK retail banking has improved dramatically in the past year, as UK banks have slashed costs and benefited from wider margins on loans. The improving prospects have attracted strong investor interest in the sector. Last year’s sale of £3.2bn government-owned shares in Lloyds was oversubscribed and investors are now turning their attention to a string of other retail banking stocks that are expected to list on the stock market over the next couple of years.
TSB – 630 branches that have been spun out of Lloyds – is expected to float in the summer, while Metro Bank and Virgin Money are also eyeing listings. RBS is planning to float its Williams & Glyn's business, while Santander UK, the division of the Spanish bank, is considering pushing ahead with its long-sought after London listing later this year.
Metro Bank, which opened in central London in 2010, on Sunday completed a £387.5m fundraising to accelerate the opening of more branches.
New banking entrants are benefiting from a drive by politicians and competition bodies to weaken the dominance of the big four banks.
Ed Miliband, Labour leader, last week said that if he won the 2015 election he would force the big lenders to divest hundreds of branches to create two new competitors.
Aldermore launched in the UK in 2009 as an SME focused lender. It branched into residential mortgages a year later and has since lent more than £3bn to small business and homeowners.
Initially backed by AnaCap, the private equity group, it has also attracted investment from Morgan Stanley Alternative Investment Partners and Goldman Sachs Asset Management. In the first half of 2009 it made a profit of £9.2m.
Phillip Monks, the bank’s chief executive said the latest fundraising would “provide us with the opportunity to do even more to champion Britain’s small businesses, the lifeblood of our economy.”