Clydesdale Bank reveals cut-price IPO price range and confirms when it will list on the London Stock Exchange
Clydesdale Bank’s London float is drawing near: the bank has revealed the price range of its upcoming IPO will be 175p-235p per share.
The British lender, currently owned by National Australia Bank (NAB), confirmed rumoured plans for a demerger and initial public offering last month, announcing its intention to float on both the London and Australian stock exchanges.
The set price range gives Clydesdale, which also includes Yorkshire Bank and is often referred to as CYBG in documents, a market cap of £1.54bn-£2.07bn, a discount from the bank’s book value of between £2bn and £2.5bn.
The lowest end of the price range puts Clydesdale's value at just 0.56 times book value, putting it well below some of its challenger banks.
Metro Bank is gearing up to float on the London market, with talks of a flotation valuing it at three times book value – despite never having made a profit.
Analysts now suggest Metro Bank may end up having its value knocked down following Clydesdale's cut-price offer, with Gary Greenwood from Shore Capital commenting that he struggles "to see why either can justify a valuation premium to book value given weak profitability".
Read more: Clydesdale gears up for next month's IPO
Under the demerger, 75 per cent of the bank’s shares will be sold to NAB shareholders, and the remaining 25 per cent to institutional investors through the IPO.
Clydesdale announced in a trading update last week that fourth quarter performance was in line with expectations, with 6.6 per cent growth in the bank’s loan book on an annualised basis.
Clydesdale, which is kicking off an investor road show this week, expects to commence trading on the London Stock Exchange on 2 February and in Australia on 3 February.