Shawbrook poised for £2 billion London listing as IPO market revives in the City

Shawbrook, the specialist lender rooted in Essex, is preparing to make a significant return to the London Stock Exchange, targeting a valuation of up to £2 billion through its initial public offering. The move is tipped to be the most substantial listing in the City this year and signals renewed momentum in the capital’s IPO landscape.

The bank’s private equity owners, Pollen Street and BC Partners, together with senior management and other shareholders, plan to sell as many as 95.2 million shares at a price range of 350p to 390p each. At the upper end, the sale would generate over £371 million, largely benefitting the private equity firms while keeping them as significant stakeholders after the flotation. Shawbrook also aims to raise £50 million in new capital, further strengthening its balance sheet.

Tracing its origins to the finance arm of Whiteaway Laidlaw and Company, established in 1882, Shawbrook has undergone several transformations. In 2011, the institution emerged in its current form following a series of acquisitions and mergers, notably after Whiteaway Laidlaw was purchased by the buyout arm of the Royal Bank of Scotland. In 2015, the bank first listed publicly in London at a £725 million valuation, only to be taken private again two years later by Pollen Street and BC Partners in a deal worth £868 million.

Since then, the owners have invested heavily in revamping Shawbrook’s technology platform and expanding its business book. Deposits now total £17.6 billion, with loans of £18.3 billion, including a notable £598.1 million in motor finance. The industry has recently faced scrutiny from regulators regarding mis-selling practices, but Shawbrook maintains that its exposure is immaterial.

The upcoming IPO arrives as the Financial Conduct Authority implements broad reforms to make London more attractive for public listings. A series of recent and planned flotations, such as those of Princes Group and Beauty Tech Group, point to renewed confidence in the UK equity market. Market observers are closely monitoring Shawbrook’s float as a potential catalyst for further listings in the City.

The success of this listing may serve as a bellwether for both investor appetite and the future of large-scale IPOs on the London market, underlining a sense of optimism as the City emerges from a prolonged dearth of significant flotations.