Atom Bank lines up a new chief executive after its £600m sale process failed to draw a firm bid

Atom Bank is preparing to replace Mark Mullen, its co-founder and chief executive of more than a decade, two months after shareholders shelved an auction that sought a valuation of between £600m and £1bn. Chief financial officer Andrew Marshall is expected to take the job on an interim basis.

Atom was founded in 2013 by Mullen, formerly chief executive of First Direct, and Anthony Thomson, who co-founded Metro Bank and stepped down as Atom's chairman in 2018. The app-only lender, headquartered in the North East, now serves roughly 250,000 customers and employs about 600 people.

News of the succession plan emerged on 28 August. In a statement, the bank framed the move as "part of the founding CEO and board's prudent long term planning for Atom's next stage of growth and development".

The context is an auction that did not clear. Jefferies ran a sale process that attracted several private equity firms and at least two building societies, but produced no offer the board was willing to accept. Pollen Street Capital tabled a bid below the asking price, while Yorkshire Building Society and Leeds Building Society both reviewed the business and declined to proceed. Shareholders shelved the process in June.

The cap table explains why the gap proved unbridgeable. BBVA has been an anchor investor since before Atom's 2015 launch and sits alongside Toscafund and Infinity Investment Partners, the trio that has led successive capital raises including a £100m round in November 2023. Neil Woodford's Woodford Investment Management was an early holder. Atom's most recent primary raise was reported to value the bank at about £350m, below the £459m attached to it in 2022.

An asking price of £600m therefore required buyers to pay a substantial mark-up on the last carrying value of a business whose paper valuation had already moved backwards. None did. That leaves long-dated holders with a stake they cannot exit at the price they want, and a bank that has now tried both routes to liquidity: an initial public offering, which was delayed, and a trade sale, which stalled.

Atom reached its first annual pre-tax profit in the year to March 2024, reporting a £27m operating profit and a 39% increase in customer borrowing to £4.1bn. Profitability strengthens the case for a listing at a later date, but does not resolve the valuation dispute that ended the sale.

For now the immediate question is succession. Marshall's expected interim appointment gives shareholders time to run a search, and gives whoever takes the role permanently the task of finding an exit that the register can agree on.

Original source: BusinessCloud — https://businesscloud.co.uk/news/atom-bank-ceo-expected-to-step-down-after-failed-sale/