Precise parent Charter Court set for 2017 IPO

Sky News says Charter Court, which wasfounded in 2008 and is backed by US investor Elliott Management, is also in talks with EY to help co-ordinate the listing "later this year".

In May 2016, Charter Court cancelled its sale plans after bids failed to reach the £400m asking price.

BC Partners, Varde Partners and Warburg Pincus made bids that fell "substantially short" of the asking price due to concerns about the impact of a possible Brexit.

At the time, sources that Elliott would retain ownership of Charter Court and pursue a stock market listing within three years.

Charter Court made post-tax profits of £21.4m in 2015 and its profits are expected to rise by close to 100% this year.

Nick Field, Associate Director at M&A and debt advisory firm Livingstone, said: “The Charter Court IPO will be an important test of confidence in the UK specialist mortgage market post-Brexit. 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.
 
“The challenger business model faces some hurdles of its own, however, which will 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. 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.”