At Beauhurst our research analysts monitor Companies House for signs of investment as well as the media. This gives us the unique ability to pick up on equity investment which isn’t accompanied by PR. This week, amongst others, we’ve picked up on a funding round by Redwood Bank.
Redwood, a challenger bank which provides financial products to the SME market, has just raised £9.74m. This comes off the back of £1.21m raised last November, and a £30m equity investment from Warrington Borough Council the April before, when it also received it’s banking license.
Redwood was incorporated by the famous property developer David “Spotty Rowland and his son Jonathan in 2015. Rowland senior was worth £692m in 2017, according to the Sunday Times. He made his first million at 23 through property, before selling his stake in investment company Fordham a year later in 1970 for £2.4m, and promptly moving to France. He has been described in the Telegraph as an ex-corporate raider.
Redwood currently employs around 50 people, including an ex-director at Lloyds, and the head of HSBC’s corporate banking arm in Canada. Chairman Jonathan Rowland used to be chairman of the Banque Havilland, a Luxembourg bank also set up by his father.
It looks as though Redwood will be be looking to follow in the footsteps of Metro Bank, another challenger bank which IPO’d in 2016. Like Metro, Redwood is operating a more conventional model than tech-focussed challenger banks such as Revolut, Monzo, or Atom.
It looks as though Redwood will be be looking to follow in the footsteps of Metro Bank, another challenger bank which IPO'd in 2016.
Public finance for private enteprise
The investment by Warrington Borough Council is particularly interesting –it is a sizeable investment in SME terms, and it is rare that such a sum should be invested without co-investors. It’s also unusual that a regional government body has invested independently, with funds that aren’t managed by a more traditional PE investor. From this article by Warrington’s head of corporate finance Danny Mather, it looks as though the council hopes to boost lending to SMEs (which has curtailed since the 2008 recession). Investing into Redwood could indirectly facilitate this.
In the company’s 2017 annual return, Warrington Borough Council owned a 33% stake in the bank, with Jonathan retaining a sizeable 25%. Ruskin Capital Ltd, an investment vehicle which is registered in Guernsey, owns a similarly sized stake. It will be interesting to see whether this investment was a follow-up, or whether new external investors have put money into the bank.
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