Coram AM: M&A opens door for challenger banks

A surge in M&A within the alternative credit space over the next few years makes it an attractive proposition for investors according to Coram Asset Management’s James Sullivan.

Coram AM: M&A opens door for challenger banks


The growth of the alternative lending industry has been a key theme in the UK in recent years with challenger banks picking up where the big banks stopped by offering credit to smaller and medium-sized businesses, he said.

Sullivan, co-founder and director at Coram, called it a “mini-revolution”, and has opted for holdings in the likes of Provident Financial and Secure Trust Bank.

However, as a result of the surge in growth the market has begun to look overcrowded and Sullivan expects the more established challenger banks to look at eating up their rivals over the next 12 months.

He said: “The fact that the big banks are no longer lending has created an opportunity for small lenders and challenger banks to come through.

“I do expect to see over the next 12 months a lot of consolidation in the alternative lending space as there may be just a few too many operating.”

In the medium term, Sullivan predicts that the next one to two years will see bigger banks catch on to the business lapped up by challengers, and begin to embark on acquisitions of their own.



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