OneSavings shares wilt as JC Flowers sells 8% stake
Updated : 16:43
OneSavings Bank was under pressure on Wednesday after funds managed by private investment firm JC Flowers sold 20m shares in the challenger bank, equivalent to an 8% stake.
The shares were sold at 375p each via an accelerated bookbuild, raising gross proceeds of £75m for the funds. Citigroup Global Markets and Credit Suisse acted as joint bookrunners in the transaction, with Rothschild the sole financial adviser to JC Flowers.
A number of existing shares in OneSavings held on behalf of the JC Flowers funds equal to around 6% of the number sold under the bookbuild process have been distributed to certain investors in the funds. These investor shares are separate and in addition to the shares sold under the bookbuild arrangements.
It was the third selldown in roughly seven months by Flowers, the firm run by the former Goldman Sachs banker Chris Flowers that floated the bank at 170p in June 2014.
Flowers has agreed to a fresh 90-day lock-up for its 23% remaining stake.
By the close on Wednesday, the shares were down almost 6% to 374p.
Analyst Ian Gordon at Investec said it was "curious timing" for the sale at a 6% discount to the closing share price and 14% below the price of 438p which it achieved last time out on 25 May.
"We do not argue that OneSavings is the most undervalued specialist bank," he said, describing OneSavings as a "quality low-risk bank with an outstanding management team", with no exposure to consumer credit and a recent history of pulling back from market segments where pricing has started to become questionable.
The bank's core business is buy-to-let lending, which now accounts for almost 100% of its net loan growth, which has led to the bank producing a 28% return on equity alongside a 28% cost:income ratio in the first half of the year, with a sizeable surplus on the balance sheet.
"Either it will find fresh opportunities (portfolio acquisitions) that meet its exacting standards or (we think) it will wish to start returning this surplus to shareholders via special dividend or buyback," Gordon said.