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Bank pulls flotation as market tightens

Aldermore Bank’s decision this morning to scrap its flotation which was due to take place on Friday is another indication that the market for new issues is tightening and will put a question mark against a number of others that are in the pipeline.

It also represents a setback for the campaign to expand and diversify banking in the UK. A number of banks have been planning flotations to raise the capital required to meet stringent EU rules on reserves. Among them is Edinburgh-based Virgin Money and Metro Bank.

Aldermore has been growing both in scale and reputation very quickly since being set up only five years ago with 50 staff. It now has 800 staff and 160,000 customers and has developed a range of mortgage and small business products, mainly in asset and invoice financing, that have proved a popular alternative to the established lenders.

It has 12 regional offices but no branches, relying instead on a network of 14,000 agents. Expansion was planned through a flotation expected to value it at £800 million. The decision to withdraw is a serious sign of a slowdown in the appetite for new issues and follows a similar move by Edinburgh-based Miller Homes to postpone its own flotation which announced in August.

It seems the market will only consider backing the most outstanding companies. A fall in the markets over slow European growth and international tensions has clearly contributed to the change in sentiment, though there has been a growing view that the market was becoming saturated and advisers too greedy in their valuations.

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