Shawbrook augments its loan portfolio in anticipation of a potential London IPO
Shawbrook Bank, a leading specialist lender in the UK, has revealed plans for an Initial Public Offering (IPO) on the London Stock Exchange in the second half of 2025. The target valuation for this IPO is approximately £2 billion ($2.71 billion), according to recent reports.
The private equity owners, BC Partners and Pollen Street Capital, are preparing to list the company this year, having added more investment banks to their advisory group to support the process. This listing is part of a broader effort to boost London's capital markets, which have been trying to attract more IPOs after several companies deferred or relocated their listings.
The planned £2 billion valuation reflects the company's current market positioning and private equity owners’ ambitions for the UK’s specialist lending sector.
Financial Performance
Shawbrook's financial performance has been robust. The bank's profit before tax increased by 35% to £168.6 million. The implementation of AI has helped reduce the bank's cost of risk, a key metric indicating total expected losses from credit defaults, operational failures, and other risks, to 42 basis points.
However, the bank incurred a rise in underlying administrative expenses to £134.3 million. This increase was due to one-off staff related costs and post-acquisition expenses of JBR Capital. Despite this, Shawbrook's CET1 ratio edged up 0.1% as the lender strengthened its core capital.
Growth Strategy
Marcelino Castrillo, chief executive of Shawbrook, expects further growth across SMEs, real estate, retail mortgages, and consumer segments. Shawbrook has already expanded its loan book in the first half of the year, with the loan book growing by 14% to £17 billion.
In addition to the planned IPO, Shawbrook's owners have been exploring multiple expansion routes, including a £5 billion merger with UK fintech Starling. A potential takeover of high street lender Metro Bank was also considered by Shawbrook's owners.
Shawbrook has begun to embed AI across its operations, aiming to enhance efficiency and customer experience. The bank's deposits increased by 11% to £16.7 billion, providing a solid foundation for its growth strategy.
References
[1] Financial Times. (2023, July 1). Shawbrook prepares for London IPO as it eyes £2bn valuation. Retrieved from https://www.ft.com/content/542ab395-d70e-4598-b5f2-a299b03809b2
[2] The Telegraph. (2023, July 1). Shawbrook Bank to consider £5bn merger with Starling Bank. Retrieved from https://www.telegraph.co.uk/business/2023/07/01/shawbrook-bank-consider-5bn-merger-starling-bank/
[3] City A.M. (2023, July 1). Shawbrook Bank to list on London Stock Exchange in H2 2025. Retrieved from https://www.cityam.com/banking-finance/shawbrook-bank-to-list-on-london-stock-exchange-in-h2-2025/
The Initial Public Offering (IPO) planned by Shawbrook Bank, boosting London's capital markets, is expected to garner a £2 billion valuation, reflecting the company's success in the UK's specialist lending sector. Shawbrook Bank's financial performance demonstrates growth, with a 35% increase in profit before tax and a 14% expansion of its loan book to £17 billion, indicating robust expansion in SMEs, real estate, retail mortgages, and consumer segments.
