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LONDON, June 5 (Reuters) - OneSavings became thefirst UK bank to list for more than a decade on Thursday,pricing its shares low to ensure success in a market floodedwith new issues and offering scant encouragement to a queue ofother small banks looking to follow.
Investors will have their pick of British banks in the nextcouple of years. Up to five lenders - the so-called new"challenger banks" seeking to disrupt Britain's high-streetnames and ride a recovering economy - also plan tolist.
But a recent glut of IPOs means that interest in new namesis cooling, and with this in mind OneSavings priced its sharesat the bottom of its 170-225 pence range, valuing it at 413million pounds.
"There's definitely some fatigue. Investors have got greatbig piles of paperwork on their desks. For them to be interestedyou have to find a way to differentiate yourself," said AndyGolding, chief executive of OneSavings.
"We're trying to dance in a few of those gaps that big banksleave behind," said Golding.
Shares in OneSavings opened at 172 pence and were up 4.4percent from their issue price at 177.5 pence at 0802 GMT.
The bank focuses on specialist lendings, including themarket for buy-to-let mortgages. Golding said that the books forthe offer were covered more than twice, but that the firm hadbeen advised against a higher pricing in current conditions.
The IPO will raise gross proceeds of 134 million pounds,OneSavings said, of which the bank will receive 41.5 million.
Proceeds from UK listings have more than tripled in the yearto date to $8.8 billion, according to Thomson Reuters data lastweek, as companies rush to take advantage of strong equitymarkets.
Fellow "challenger bank" TSB is also set to list after ownerLloyds Banking Group laid out plans last month.
Lawmakers and banking regulators are keen to see new banksemerge to break the dominance of Britain's biggest five lenders,which control more than three quarters of the personal currentaccount market and TSB is seen as a viable challenger.
But as a result of conditions in the current market for IPOsLloyds has limited the flotation to 25 percent of shares, thebottom end of expectations, and banking sources said it could bepriced at less than TSB's book value of 1.5 billion pounds.
Analysts at Espirito Santo investment bank said the pricingof OneSavings' float was "a warning shot" for Lloyds' listing.
"The pricing of OneSavings bank at the bottom of the 170-240pence would appear to be a negative for Lloyds... as investorappetite for UK challenger banks' listings appears lower thanfirst anticipated," they said in a note.
OneSavings is the first UK bank to list since the flotationin 2000 of now-defunct lender Bradford & Bingley's, Goldingsaid. OneSavings was established in 2010 when the strugglingKent Reliance building society was rescued through a 50 millionpound capital injection by U.S. private equity firm JC Flowers.
Even based on the price at the bottom of the range, JCFlowers will have tripled their invested capital of around 100million pounds since buying the bank in 2010 based on the amountof shares sold and their remaining shareholding.
The lender made a pretax profit of 31.4 million pounds lastyear, up from 8.1 million in 2012, and increased lending by 38percent to 3 billion pounds. It is targeting a dividend payoutof at least 25 percent of earnings.
Barclays acted as global co-ordinator on theOneSavings listing. Canaccord Genuity and RBC Europe were jointbookrunners, while Rothschild advised the deal.
($1 = 0.5969 British Pounds) (Reporting by Freya Berry and Anjuli Davies; Editing by MarkPotter and Sophie Walker)
