Shawbrook shares jump after biggest UK company IPO on LSE in two years

(corrects headline and references in paragraph 1 and 11 to show that Shawbrook's IPO is the largest UK-based company to list on the LSE in 2 years, not the largest)

By Charlie Conchie

LONDON (Reuters) -Shares in British lender Shawbrook jumped as much as 8% in early Thursday trade following London's biggest initial public offering by a UK-based company in two years.

The company priced its shares at 3.70 pounds apiece, in the middle of a previously announced range of 3.50 to 3.90 pounds, valuing it at about 1.92 billion pounds ($2.58 billion).

The stock rose as much as 7.8% from the IPO price to 3.99 pounds in early trading. It was last up 6% at 3.92 pounds.

The bank, owned by a vehicle controlled by private equity firms Pollen Street and BC Partners, sought to raise around 50 million pounds by selling new shares, while its two private equity owners expected to raise around 298 million pounds from the deal, according to its prospectus.

IPO FOLLOWS PERIOD OF SCANT LISTINGS IN THE UK

Shawbrook's IPO comes after a barren period of new listings in Britain and an exodus of firms to overseas markets. London, which was Europe's most popular venue for listings in the boom of 2021, has attracted only 2% of all European IPO volumes since January, Dealogic data shows.

The listing also marks a return to the public market for the bank after it was taken private by BC Partners and Pollen Street in 2017. The owners have also explored a number of deals with rival lenders in the past two years, including Metro Bank and Co-op Bank, Reuters has previously reported.

Shawbrook initially considered listing earlier this year, according to a person familiar with the matter, but markets were roiled by President Trump's announcement of sweeping tariffs in April. European bank stocks have risen sharply since then and have outperformed their U.S. and Asian peers, according to data from S&P Global.

"The strong support we have received from investors across the UK, Europe and the U.S. reflects the strength of Shawbrook's proposition and the business we have built," CEO Marcelino Castrillo said in a statement.

PROCEEDS TO FUND FURTHER ACQUISITIONS

Shawbrook posted underlying profit before tax of 168 million pounds in the first half of this year, up from 124.5 million in the same period last year. 

It is planning to use part of the IPO proceeds to fund further acquisitions after striking 24 deals since 2011, according to its prospectus. In September, it announced the acquisition of lender ThinCats, which added around 700 million pounds to its loan book.

The IPO is the largest by a UK-based company on the London Stock Exchange since Admiral Acquisition, a special purpose acquisition company, in May 2023, according to LSEG data. Excluding SPACs, it is the largest since 2021, according to the data.

The IPO comes amid signs of a revival in European listings since the summer. Canned-tuna maker Princes Group is set to float on the London Stock Exchange in the coming days, while cosmetic technology company Beauty Tech Group listed earlier this month.

($1 = 0.7451 pounds)

(Reporting by Charlie Conchie in London; additional reporting by Yadarisa Shabong in Bengaluru. Editing by Anousha Sakoui and Mark Potter)