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Metro Bank comparing new share price with old price - post 75m new shares

I wasn't actively tracking Metro Bank, but had been aware of the story these past few weeks. Over the weekend I started reading up about them. The close on Thursday was 536p trading up on Friday to close at 669p up 24.8%. As I write today they're up about 10% at 772p (It also was at 782p whilst working out some of the numbers below)



The cash raise was priced at 500p a 36p discount to closing price on Thursday
They wanted to raise £350m but actually raised £375m issuing 75m new shares.

The BBC wrote about the crisis on 19th March '19 when the share price was 850p, it had dropped from 3396p on 27 July '18 (75% drop)

Metro has debt of £249m

Here's some high level analysis to translate old money into new money (partly as Google haven't updated the total voting rights (TVR) yet).

27th July '18 company valuation was Marcap £3,308,398,753
2nd May '19 TVR was 97,420,458 and Share price 650p Marcap £633,232,977
Share price at 500p Marcap £487,102,290
Raised £375,000,000
Total £862,102,290

Post cash raise, TVR 172,420,458 and at 782p Marcap is £1,348,327,981

So, pre crisis marcap was £3.3bn, post crisis marcap is £1.3bn and they've now got £375m more cash. As such a peak valuation of £3,683,398,753 could be attained if full confidence returned. This would represent a share price at TVR 172,420,458 of 2136p.

As such 2136p is "the new" 3396p, so today's current price of 773p is equivalent to 1229p in old money. This was the price around 26th Feb '19 (half way through a dramatic drop).

After the return of confidence to markets in January '19 the price got to 2,202p on 22nd Jan prior to a steep drop to 1345p on 23 Jan '19.

As such let's take 2,202p as our base line valuation from "the good times". That equates to 1385p in new money.


  • So if you think Metro Bank has weathered the storm and should be at the same valuation as 22nd Jan '19 your answer is 1385p (up 79% from today)
  • And if you think they should go back to their summer '18 peak (in new money 2136p) that's a 176% rise from today.


The clever folks at Norges Bank bought a 3.16% stake in Metro Bank on Friday, making it one of the company’s 20 largest shareholders. As I recall this is Norway's sovereign wealth fund which is aiming to divest itself from old fossils. Could also be the Norwegians challenging the Swedes for top position in the league of popularity in the UK for business current accounts overall quality of service as Handelsbanken (Swedish) leads the pack at 85% followed by Metro Bank with 71%.

source Metro Bank 2018 results

Please do your own research, this is not investment advice. I own shares in Metro Bank.
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Comments

  1. UnknownMay 22, 2019 at 10:11 AM

    thanks. bought in in size yesterday at 6.85. probably should be adding but got alot as it is

    ReplyDelete
    Replies
    1. Lemming99May 23, 2019 at 1:47 AM

      no problem, that's a nice 28% lift for you so far still way under the NAV

      Delete

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