NEW YORK (The Deal) -- The U.K.'s Metro Bank plans to sit out the current stampede of "challenger" bank initial public offerings and will instead target a mid-2016 listing aiming to raise about £300 million ($452 million) in new money, said founder Vernon Hill.
Metro, which in 2010 became the first full-service bank to launch in the U.K. in more than a century, is one of a crop of recently created or restructured banks aiming to capitalize on public discontent with the Big Four -- Lloyds Banking Group (LYG), Royal Bank of Scotland Group (RBS), HSBC Holdings (HSBC) and Barclays (BCS) -- and the post-credit crisis regulatory issues dogging those banks.
Metro's existing shareholders include Hill, with about 10%, Fidelity Investments, Wellington Management and SAC Capital Advisors founder Steve Cohen. Hill expects the IPO would value the business at more than £1 billion.
"The most I can say is mid-year," said Hill of the timing. "None of the stakeholders are selling shares."
Metro has raised £650 million in four layers of private capital and Hill said it isn't tempted to follow challenger bank peers -- including Aldermore Group and Shawbrook Group and potentially National Australia Bank Ltd.'s unwanted subsidiary Clydesdale Bank -- to the market this year. Recent IPOs in the sector have also included last year's listings for Richard Branson and Wilbur Ross-backed Virgin Money Holdings, TSB Banking Group and JC Flowers & Co.'s OneSavings Bank.
Aldermore and Shawbrook held IPOs in March and April, respectively. AnaCap Financial Partners LP-backed Aldermore is trading 25% above its IPO price, with Pollen Street Capital LLP-backed Shawbrook up almost 5%.
"We are only going to raise money when we need more money to support growth and that's not going to happen until next year," said Hill. He said Metro has yet to line up IPO advisers.
He also reiterated that Metro has no interest in participating in the expected consolidation among and of newcomer banks. An early mover on the sector wasBanco Sabadell SA, which in March agreed to pay £1.7 billion for TSB, a Lloyds spinoff.
"We are not in the merger and acquisition business either to buy or sell," said Hill.
Metro said on Wednesday that deposits increased by 109% year-on-year in the first quarter to £3.375 billion, with loans up 91% at £1.83 billion. Total assets were £4.248 billion, up 74% from a year earlier.
The bank made a pretax loss of £8.5 million, narrowing from a loss of £10.6 million a year earlier and from a £8.9 million loss in the fourth quarter. Metro spends about £3 million on each branch. It opened three in the quarter, now has 34, and plans seven more openings this year. Its branches, or "stores," as it calls them, are located in southeast England.