CVC has teamed up with financial services investor JC Flowers to pursue a potential acquisition of Aldermore, the UK specialist bank owned by South Africa’s FirstRand, according to Private Equity Wire. The potential bid has been framed at about £1.4bn, according to the same report.
Sale process and timing
FirstRand is seeking to sell Aldermore after announcing plans to exit the UK business earlier this year, according to Private Equity Wire. Prospective buyers have been asked to submit non-binding offers, and the first deadline was understood to be Tuesday, according to two people familiar with the process cited in the report.
FirstRand, Aldermore and CVC reportedly declined to comment on the process, according to the same report. JC Flowers reportedly did not respond to a request for comment, according to the report.
Why FirstRand is exiting
The decision to exit followed a significant increase in provisions related to the UK’s motor finance redress scheme, according to Private Equity Wire. FirstRand ultimately set aside £750m ($1.01bn) for potential compensation linked to mis-sold loans, the report said.
Other potential bidders
A number of other financial and private equity investors were also understood to be considering bids for Aldermore, according to the report. Potential suitors mentioned included NatWest, Centerbridge and Warburg Pincus, according to the report.
Metro Bank and Lloyds have previously been reported as possible bidders, according to the report.
Valuation references cited
RBC analysts estimated earlier this month that Aldermore could be worth approximately £1.35bn excluding its motor finance operations, rising to around £1.45bn when that business is included, according to the report.
Widely known context: in UK public M&A processes, initial non-binding offers are commonly used to narrow a field of interested parties before later-stage diligence and binding bids.
