(Adds chief executive comment, updates share price)
LONDON, June 5 OneSavings became the
first UK bank to list for more than a decade on Thursday,
pricing its shares low to ensure success in a market flooded
with new issues and offering scant encouragement to a queue of
other small banks looking to follow.
Investors will have their pick of British banks in the next
couple of years. Up to five lenders - the so-called new
"challenger banks" seeking to disrupt Britain's high-street
names and ride a recovering economy - also plan to
But a recent glut of IPOs means that interest in new names
is cooling, and with this in mind OneSavings priced its shares
at the bottom of its 170-225 pence range, valuing it at 413
"There's definitely some fatigue. Investors have got great
big piles of paperwork on their desks. For them to be interested
you have to find a way to differentiate yourself," said Andy
Golding, chief executive of OneSavings.
"We're trying to dance in a few of those gaps that big banks
leave behind," said Golding.
Shares in OneSavings opened at 172 pence and were up 4.4
percent from their issue price at 177.5 pence at 0802 GMT.
The bank focuses on specialist lendings, including the
market for buy-to-let mortgages. Golding said that the books for
the offer were covered more than twice, but that the firm had
been advised against a higher pricing in current conditions.
The IPO will raise gross proceeds of 134 million pounds,
OneSavings said, of which the bank will receive 41.5 million.
Proceeds from UK listings have more than tripled in the year
to date to $8.8 billion, according to Thomson Reuters data last
week, as companies rush to take advantage of strong equity
Fellow "challenger bank" TSB is also set to list after owner
Lloyds Banking Group laid out plans last month.
Lawmakers and banking regulators are keen to see new banks
emerge to break the dominance of Britain's biggest five lenders,
which control more than three quarters of the personal current
account market and TSB is seen as a viable challenger.
But as a result of conditions in the current market for IPOs
Lloyds has limited the flotation to 25 percent of shares, the
bottom end of expectations, and banking sources said it could be
priced at less than TSB's book value of 1.5 billion pounds.
Analysts at Espirito Santo investment bank said the pricing
of OneSavings' float was "a warning shot" for Lloyds' listing.
"The pricing of OneSavings bank at the bottom of the 170-240
pence would appear to be a negative for Lloyds... as investor
appetite for UK challenger banks' listings appears lower than
first anticipated," they said in a note.
OneSavings is the first UK bank to list since the flotation
in 2000 of now-defunct lender Bradford & Bingley's, Golding
said. OneSavings was established in 2010 when the struggling
Kent Reliance building society was rescued through a 50 million
pound capital injection by U.S. private equity firm JC Flowers.
Even based on the price at the bottom of the range, JC
Flowers will have tripled their invested capital of around 100
million pounds since buying the bank in 2010 based on the amount
of shares sold and their remaining shareholding.
The lender made a pretax profit of 31.4 million pounds last
year, up from 8.1 million in 2012, and increased lending by 38
percent to 3 billion pounds. It is targeting a dividend payout
of at least 25 percent of earnings.
Barclays acted as global co-ordinator on the
OneSavings listing. Canaccord Genuity and RBC Europe were joint
bookrunners, while Rothschild advised the deal.
($1 = 0.5969 British Pounds)
(Reporting by Freya Berry and Anjuli Davies; Editing by Mark
Potter and Sophie Walker)