Alba Bank Investment Opportunity

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The Seismic Opportunities Fund enables you to make an investment through the fund directly into Alba. The Principals of Seismic, through a relationship with Jim McColl, founding shareholder and NED, have negotiated this exclusive opportunity which they believe to be at an attractive valuation with all fees being borne by the company.

  • £1,000
    MIN. INVESTMENT
  • 19.05.2021
    DEADLINE
  • £5 million
    TARGET RAISE
  • £10.7 million
    POST MONEY VALUATION

A rare opportunity to invest at Series A. Seismic Venture Partners, have negotiated an opportunity for investors to own almost half of the business as part of the current raise of £5 million. This is a fraction of the valuation of other challenger banks at the same stage of their evolution.

Alba Bank (“Alba”) is a new challenger in the UK financial services industry, launched to exploit a gap in the profitable UK SME (“Small to Medium Enterprise”) banking market.

The relationship between bank and business is critical for the smooth running of the economy. For too long, the big five have replaced the local bank manager with algorithms in head office and deemed 'relationship banking' too expensive. There is a huge unmet need for the Alba model of high-touch and high-tech to fill this void.

Alba means “sunrise or new dawn”, expressing their innovative approach to SME banking across the UK.

The UK SME banking market has been targeted successfully by some, but not many new entrants since 2008. The market is large representing 53% of business turnover in the private sector. Alba’s opportunity is to enter the market using a high-touch, high-tech approach to penetrate and serve this market.

This route to market is proven and Alba will benefit both from the learning of others who entered the market earlier, and the enhancements in technology which have taken place in recent years.

They are seeking to raise an initial amount of £5m. This splits into £2.8m to build out the team to take them out of the Mobilisation phase, and £2.2m which is the minimum regulatory capital during Mobilisation.

They are looking at the £5m buying 47% of the equity giving a post money valuation of £10.7m.

Alba expects to be in Mobilisation for c. 6 months at which time there will be a Series B round of £21.8m will be required to exit Mobilisation (the Series B round is expected to be filled in full by institutional investors). £5.1m will be required to build out the team and operation over the 1st year and £16.7m of minimum regulatory capital will be required to cover forecast lending growth. It is proposed that the pre-money valuation at this stage will be £15m, i.e. a 40%+ uplift on the equity.

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Highlights

  • Fantastic, rare opportunity to invest in a new SME focussed bank. Well positioned to scale rapidly and be a leading player in the UK market.
  • An addressable market of £150bn+ with existing banks in the UK are unable to meet SME demands.
  • Market leading technology platform and focus on relationship banking - a significant differentiator from existing players.
  • Experienced and confident team who have invested and operated businesses through multiple economic cycles.
  • Demand for loans from SMEs dramatically increasing due to impact of COVID-19 & Brexit. Incumbent banks struggling to respond to the satisfaction of SME customers
  • Strong reference cases for a successful liquidity event either IPO or private sale.

Market analysis

SMEs are often referred to as the lifeblood of the economy. SMEs, account for 60% of employment and 52% of business turnover in the UK private sector. This is 16.6m people in employment and a combined turnover of £2.2 trillion. 

SMEs are critical to the economy, creating employment, driving innovation and helping to open new markets.  In terms of external finance, the market size is huge. Alba’s addressable market is SME lending of £150bn, overdrafts of £10bn, asset finance of £15bn and the professional buy-to-let market that generates £3bn of new lending every month.

It is increasingly clear that the current banking system continues to fail the SME market. Centralisation of decision making and automation of loans below £2m-£4m have made it increasingly difficult for high street banks to satisfy the borrowing requirements of SMEs effectively. Automation does not recognise the fact that many SMEs have a story that is hard to capture through statistical/analytical modelling. SMEs require the personal touch of a local banker who truly understands their buisness.

Business model

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Use of funds

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Financial projections

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Key team

Rod Ashley - Chief Executive Officer

Rod is an experienced Bank Chief Executive and Board Member operating at a senior management and leadership level since 2000. Most recently Rod was CEO of Airdrie Savings Bank and he sits on the Board of the Adam Smith Business School at the University of Glasgow.

Wendy Morrison - Chief Financial Officer

Wendy is a skilled finance executive with significant experience of operating in senior finance and leadership positions over the last 17 years. In her most recent role, she was CFO of Airdrie Savings Bank. Wendy has prior board experience with Nationwide Building Society and has previously worked with Deloitte LLP. Wendy is a member of ICAS.

Jim McColl - Founding Shareholder & Non-Executive Director

Jim is one of Scotland's best known and most successful Businessmen and Entrepreneurs. He is Chairman and CEO of Clyde Blowers and has been the chief architect of its impressive growth record since buying into the business in 1992.


He has a wealth of experience investing and operating businesses through many economic and market cycles. In the past 20 years he has invested in over 20 platform acquisitions, overseen 15 exits including 2 public listings.


Jim has led several public to private transactions, mergers, de mergers, spin outs and turnarounds. Jim is the founding shareholder, director and driving force behind the creation of Alba Bank.

Exit strategy

There are numerous supporting reference cases suggesting an opportunity for a successful liquidity event either via IPO or private / trade sale.

Fee summary

A breakdown of the Fund fees is highlighted on pages 10 and 28 of the Seismic Opportunities Fund Information Memorandum.

No other fees are payable relating to this investment.

Risks

It should be noted that capital invested in the Fund is at risk and that the Fund is committing its funds to unquoted equity investment which are likely to be held on a long-term basis and be of an illiquid nature. Prospective Investors should note that most of the protections under FSMA do not apply to investments in the Fund and that compensation under the Financial Services Compensation Scheme may not be available.

Documents

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The content above has been provided by Seismic Venture Partners who are authorised and regulated by the Financial Conduct Authority under firm registration number 784448.