Newly listed W&G Investment (LON:WGI) is set to table a bid for a slew of branches that Royal Bank of Scotland (LON:RBS) has up for sale.
W&G made its début on AIM on Tuesday, only to have trading in its shares suspended, pending an announcement.
As the company has been formed with the sole intention of seeking to acquire certain assets and liabilities that are currently held by The Royal Bank of Scotland Group (RBS), the expectation is that it will make an announcement about its bid for the so-called “rainbow assets” of RBS.
The company, chaired by former Tesco (LON:TSCO) finance director, Andy Higginson, is in competition with two other groups interested in the assets: private equity groups Corsair and Centerbridge have teamed up to make one bid, while Anacap Financial Partners and Blackstone are behind the other offer.
RBS is expected to choose a suitor by the beginning of next month, or, alternatively, float the business off as a separate entity.
The sale of 315 branches has been mandated by the European Commission as the penalty for receiving a massive bail-out from the UK government, which stepped in to save the bank after it nearly collapsed under the stewardship of Fred “the shred” Goodwin.
W&G Investments came to the market after placing 15mln new ordinary shares at 100p each with some of the City's biggest names, including Schroder Investment Management, Threadneedle Asset Management and Aviva Investors.
The fund groups have committed to provide £1.1bn to the company should its bid for the assets should W&G's bid be successful; otherwise, the backers will get most of their money back, after deductions for W&G's expenses on things such as performing due diligence.
"We believe that the relevant experience of our board and the backing of a broad range of institutional investors amount to a compelling proposition for RBSG to divest these assets,” said Higginson, W&G's non-executive chairman.
“As well as helping RBSG to divest the Rainbow assets in accordance with the EC's requirements, we believe that our approach will enable the creation of a strong challenger bank which will focus on delivering excellent products and service to both corporate and retail customers," he added.