Redwood Bank, a specialist in business banking, is taking a significant step toward its future growth with a planned reverse takeover.
The bank’s parent company, Redwood Financial Partners Ltd (RFPL), has signed a Heads of Terms agreement for a reverse takeover by R8 Capital Investments plc (R8), a company listed on the London Stock Exchange.
The deal involves a share-for-share exchange that would give RFPL shareholders a majority stake in R8.
“Today is an exciting day in the bank’s history. Completing this transaction would be a major step forward for us, providing an excellent opportunity for Redwood to raise more capital, grow and diversify,” said Gary Wilkinson, co-founder and CEO of Redwood Bank.
Wilkinson added: “I am incredibly proud of what the bank has achieved in the six years since launch and I am confident about the next stage of our journey. We have an enviable network of intermediary partners, a driven team, and robust infrastructure to maximise future opportunities.”
The planned transaction comes in the wake of a strong financial performance by the Hertfordshire-based bank. Unaudited figures for the 12 months leading up to June 30, 2023, show a 7.4% growth in its lending book and a 5.3% increase in total assets. The bank also reported a record pre-tax profit of £2.8m for the first half of 2023, more than double the figure for the same period last year.
As part of the reverse takeover, R8 is planning a new issue of capital. This will serve as common equity tier 1 regulatory capital for Redwood Bank, facilitating its future growth strategies.
“While this represents a key opportunity for the bank, it remains subject to, amongst other things, definitive terms being agreed and the completion of legal and financial due diligence and regulatory approvals,” said John Stobart, legal counsel at Redwood Bank.
The bank aims to use future capital raises to increase lending capacity and explore opportunities for diversification into adjacent asset classes.
