Charter Court cancelled a £400m auction in May last year, a month ahead of the EU referendum, after it failed to achieve its desired sale price.
Sky News reports that Charter Court is once again readying itself for a public sale of its shares, with the help of EY, the professional services firm, which is helping to coordinate the listing preparations.
Private equity firms, interested in buying the company last year, talked about the possibility of inserting a Brexit clause into the deal which would allow them to cut the price they paid for the business. Weeks later the sale collapsed.
Nick Field, associate director at Livingstone the mergers and acquisition and debt advisory firm, which is not involved in the deal, said the Charter Court Initial Public Offering (IPO) will be an important test of confidence in the UK specialist mortgage market, post the Brexit vote.
“Whilst some traditional banks operating in the UK fret over their future access to the European market, Brexit has proven positive for the challenger banks in one important respect: low interest rates are now expected to persist for longer. The specialist mortgage market has performed well in the aftermath and other M&A deals such as ENRA and Together Group have now successfully transacted.”
Field said the challenger business model faced some hurdles of its own, however, which would need to be addressed early in the IPO process. “One such question is how the increase in capital weightings proposed under Basel III will impact the profitability of buy-to-let mortgage business in the medium term,” he explained. “Another issue that’s likely to play on the minds of the investors is how challengers will deal with increasing competition in higher-margin mortgage business from non-bank lenders, who now benefit from considerably greater flexibility in underwriting.”
Sky reported that Charter Court made a profit after tax of £21.4m in 2015, a figure that was expected to nearly double this year. It said based on the pre-referendum valuations of publicly-traded challenger banks such as Aldermore and One Savings Bank, its earnings implied that Charter Court would be worth in the region of £400m.
A spokesperson for Charter Court said the firm did not comment on speculation.