The decision to scrap the offering, which could have valued the bank at more than £800 million, casts a shadow over the prospects of the bigger and better known Virgin Money, which is seeking to list this month.
“Whilst we were out on the road, basically the bottom fell out of the market,” said Aldermore chief executive Phillip Monks, adding that the lender still had ambitions to list.
“A number of investors turned round to us wistfully and said, ‘you couldn’t have picked a worse time to IPO’. But they loved the story.”
The news also triggered speculation over the planned flotation of shoe designer Jimmy Choo.
Earlier this month, Scottish housebuilder Miller Homes called off its flotation but Livingston-based technology outfit Touch Bionics last week confirmed it intended to join the market.
Aldermore and Virgin are among so-called challenger banks which the government hopes can break the dominance of the “big five” of Barclays, HSBC, Lloyds, Royal Bank of Scotland and Santander UK, which together account for more than three-quarters of lending.
Aldermore, headed by former Barclays executive Monks and backed by private equity firms AnaCap and Morgan Stanley Alternative Investment Partners, had planned to sell about £300m of shares by today and list the following day.
“The bank was being sold on growth at a time that we’re seeing a flight to safety. It was the wrong stock at the wrong time,” said a person close to the deal.
The source added that books “didn’t get close” to being covered, and the valuation was regarded by some investors as too high. The bank set a price of between 217p and 265p per share.