Redwood Bank has confirmed it is in talks to raise capital through a proposed reverse takeover.

The bank’s parent company, Redwood Financial Partners Ltd (RFPL), has signed heads of terms for the reverse takeover of R8 Capital Investments (R8), a company listed on the London Stock Exchange.

R8 will acquire the entire issued share capital of RFPL by a share-for-share exchange, giving the shareholders in RFPL a majority holding in R8. Simultaneously, R8 intends to carry out new issue of capital which will be contributed to Redwood Bank as common equity tier one regulatory capital.

The transaction will facilitate a “significant change of pace” for Redwood Bank, the group said, as it aims to increase scale using future capital raises to increase lending capacity. Redwood Bank also indicated it is examining opportunities for diversification into providing finance in adjacent asset classes.

Co-founder and CEO at Redwood Bank, Gary Wilkinson, said: “Today is an exciting day in the bank’s history. Completing this transaction would be a major step forward for us, providing an excellent opportunity for Redwood to raise more capital, grow and diversify.

“I am incredibly proud of what the bank has achieved in the six years since launch and I am confident about the next stage of our journey. We have an enviable network of intermediary partners, a driven team, and robust infrastructure to maximise future opportunities.”

Legal counsel at Redwood Bank, John Stobart, added: “While this represents a key opportunity for the bank, it remains subject to, amongst other things, definitive terms being agreed and the completion of legal and financial due diligence and regulatory approvals.”

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