Hardman Talks | B-North – a unique proposition

On 12 February 2021, the B-North management team joined us on Hardman Talks for a presentation and Q&A session.

B-North is a non-listed firm, creating a fintech enabled bank to disrupt the £150bn UK SME lending market. Currently finalising its Series A capital to secure its banking licence and commence lending, it has already garnered support from high quality retail and institutional investors. It is now seeking a small number of high net worth/wealth managers able to co-invest £100k+ alongside those institutions, to balance its investor base.

Among the highlights from the presentation were:

• The focus on the growing broker channel and how B-North has a unique proposition to win quality business from this market in a way few competitors can match
• How B-North is differentiated from other challenger banks including pure Fintech by having a balanced business with benefits of a physical presence (essential for effective credit control), market leading technology delivering excellent and rapid customer service and the long experience of Directors and management in serving SMEs.
• The benefit of low cost, diversified deposit funding only available to those with a bank licence.

Management also presented how the benefits at the business level is targeted to feed through to investor returns with a target exit multiple IRR of 35-40% (company’s base case 2028 valuation of £1.6bn, a multiple of 10.7 times profit before tax).

Watch the recording

B-North offers investors a business which:

• is built solely upon state-of-the-art, cloud-native banking technology (built from scratch to address customers’ needs);
• combines this technology with experienced bankers based in empowered regional hubs (its Pod model), generating individual ownership of loans and enhanced credit control;
• will originate using an innovative economic model tuned to leverage the £20bn+ p.a. commercial broker channel; and
• will have a focus on new business when incumbents carry risk and operational distractions from bad book problems. COVID-19 has, if anything, improved B-North’s competitive position.

We believe B-North should be lower cost than peers, and its hybrid, technology-enabled model will bring it close to customers and intermediaries. The financial model requires a market share of just 2.5% by 2028 to create a highly profitable, and valuable, bank, in our view.

You can download the presentation used in the event here, or watch the recording above.