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The Deal: Royal Bank Branches Bidder Prepares for London Listing

NEW YORK (The Deal) -- A consortium of mainly institutional investors bidding for about 316 Royal Bank of Scotland Group  (RBS) branches has announced plans to list on London's Alternative Investment Market to create a publicly traded home for the assets if it prevails in the (UBS)-run auction

W&G Investments, whose chairman is Andrew Higginson, a former CFO at grocer Tesco,  said it expects to list on AIM on Aug. 14. The company comprises more than 20, mainly institutional, investors. It is competing for the Royal Bank branches with bidders including Corsair Capital and Centerbridge Partners, as well as AnaCap Financial Partners teamed with Blackstone Group (BX), which are still participants in the auction despite reports the duo were out of the running, according to people familiar with the situation.

"The company has been established with the sole purpose of evaluating and, if appropriate, pursuing the potential acquisition of certain retail and corporate banking assets and liabilities currently held by the Royal Bank of Scotland plc," W&G said, noting that it doesn't plan to consider any other acquisition.

It said it would place new shares to cover the upfront cash element of the purchase price, if a deal is agreed on with Royal Bank, and at that stage would seek admission to the main market of the London Stock Exchange.

A takeover of the branches would be classified as a reverse takeover under U.K. listing rules.

W&G's adviser and broker is Canaccord Genuity. Its consortium includes fund manager Schroders, and reportedly also peers including Threadneedle Asset Management, Aviva (AV) and F&C Asset Management.

Aside from Higginson, W&G's statement lists Shaun Doherty , a former IT and operations director at Tesco's banking unit, John McGuire and John Reed as nonexecutive directors. The vehicle takes its name from the defunct William & Glyn's brand. Royal Bank of Scotland has resurrected that brand for the auction and for the potential IPO of the branches, which it has been exploring in tandem with the auction.

The auction marks the second UBS-run process for the branches after agreed bidder Banco Santander SA scrapped a £1.65 billion ($2.5 billion) deal in October.

News of W&G's plans comes amid reports that Royal Bank, of Edinburgh, is negotiating with British financial regulators about installing its retail banking chief, Ross McEwan, as CEO to replace Stephen Hester. The bank reports first-half results Friday and may provide an update on the appointment process. It isn't seen likely to deliver news about the branches auction.

Hester announced his resignation from the 82%-state-owned bank in June in a development which was seen to bear the hallmarks of Chancellor of the Exchequer George Osborne, with whom Hester had differed on strategy. A few days after Hester's resignation Osborne ceded to a committee of parliamentarians' demand that the government investigate splitting Royal Bank into a good and bad bank.    Rothschild, Slaughter and May and BlackRock Solutions are assisting with that review, which Osborne said would be completed in the fall.

A Royal Bank spokesman declined to comment.

Written by Laura Board.

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