Aldermore Cuts IPO Valuation As Profit Soars

One of Britain's fastest-growing challenger banks will unveil a surge in profits on Tuesday even as it draws up plans to float on the stock market at a significant discount to a previous attempt last year.

Sky News has learnt that Aldermore is to announce that annual pre-tax profit in 2014 more than doubled to approximately £50m for the first time, up from £22.4m the year before.

Insiders said the figures would include a return on equity for the second half of the year of about 19% - higher than almost every one of its listed peers across Europe - underlining its attractiveness to prospective investors.

Aldermore, which provides banking services to consumers and small and medium-sized businesses (SMEs), is one of the most prominent new lenders to be established since the financial crisis.

A source close to the bank said that it could announce its intention to float on the London Stock Exchange (Other OTC: LDNXF - news) by the end of the month, although the timing could yet slip.

It is understood to be planning to sell £75m of new shares, with backing already provisionally in place from a string of blue-chip institutions.

However, Aldermore is expected to price its shares at a substantial discount to a plan last autumn which would have seen the bank valued at £800m at the mid-point of its price range.

The listing was aborted because of choppy equity markets, leading directors to conclude that it should be "priced to go" this time around.

The proposed initial public offering (IPO) will seek a valuation for the bank of between £600m and about £650m, they added.

Tuesday's results announcement will not include any substantive comments about its IPO plans, the source said.

In 2013, Lansdowne Partners and Toscafund injected about £40m into Aldermore in a deal which valued the lender at more than £450m.

Both funds are expected to consider buying additional shares as part of the IPO, which is being led by Credit Suisse (LSE: 0QP5.L - news) , Deutsche Bank (LSE: 0H7D.L - news) and Royal Bank of Canada (LSE: 0QKU.L - news) .

Aldermore is led by Philip Monks, a former Barclays (LSE: BARC.L - news) executive, and is majority-owned by AnaCap Financial Partners, a private equity firm.

Under the existing ownership structure, AnaCap holds all of the voting shares in Aldermore, although investors who buy in through the flotation will also gain voting rights.

The bank, which is a user of the Government's Help to Buy housing scheme, said in December that it had lent £4.4bn to customers since it was set up, with customer deposits totalling £4.2bn.

Aldermore is not the only challenger bank eyeing a stock market listing.

Shawbrook Bank is also expected to announce a flotation within the next few weeks, while Metro Bank, which unlike its rivals has a high street branch network, has said that it is likely to target a listing in 2016.

Aldermore declined to comment.