Metro Bank Said to Seek Private Placing Before IPO Next Year

  • Lender said to target about $600 million in share sale
  • Most prospective buyers are said to come from the U.S.

Metro Bank Plc, the British lender backed by wealthy American financiers including Steven Cohen, plans to sell shares to existing investors before going public on the London Stock Exchange next year, according to a person with knowledge of the matter.

The London-based lender has enough interest from shareholders to raise about 400 million pounds ($600 million) through a private placement of stock, said the person, who asked not to be identified because the details are confidential. The final amount will depend on market conditions, the person said. A spokesman for Metro Bank declined to comment.

Chairman Vernon Hill, 70, is seeking for Metro Bank to beat the growth of Commerce Bancorp Inc., the New Jersey-based firm he started with one outlet in 1973 that was sold to Toronto-Dominion Bank 34 years later for $8.5 billion. The British lender has hired Goldman Sachs Group Inc., Bank of America Corp.’s Merrill Lynch and Royal Bank of Canada to handle a share sale next year, people familiar with the matter have said.

Most of the prospective buyers of the stock are based in the U.S., where Hill has garnered support for his lender from investors who backed Commerce Bank, according to the person. Chief Executive Officer Craig Donaldson flew to the U.S. last week to meet with shareholders ahead of the initial public offering, said a separate person with knowledge of the matter.

While Metro Bank hasn’t made a profit since it was founded in 2010, its deposits surged 87 percent to 4.4 billion pounds in the year through Sept. 30, and the number of checking accounts increased 51 percent to 601,000 as it competed with larger U.K. lenders.

Capital Calls

Metro Bank raised 387.5 million pounds from a private placement in January 2014 in its fourth fundraising exercise, bringing the total equity capital raised by the bank to 641 million pounds since it was created. Bank of America and RBC handled the process.

In previous interviews with the British press, Hill has discussed IPO plans for 2012 and 2014. He said in April he’s keen on an share sale in 2016, which would be the “next time we need to raise capital.”

Prominent investors alongside Cohen revealed in a February company filing include property and finance tycoons Ken Moelis, Richard LeFrak and Bruce and Robert Toll, among a roster of shareholders backing the lender as it aims to shake up U.K. banking with branches open seven days a week, free coin counting and dog treats.

Willett Advisors LLC, which manages the investments of Michael Bloomberg, the founder of Bloomberg LP, the parent of Bloomberg News, has a minority, passive interest in Metro Bank.

Before it's here, it's on the Bloomberg Terminal.