By Daniel Hunter

Shawbrook Bank has been valued at £725 million as part of its floatation on the London Stock Exchange.

The challenger bank, which was founded in 2011, set its share price at 290 pence per share. It is hoping to raise around £90m from 75 million shares.

Chief executive Richard Pyman said he was "delighted" with the valuation and the floatation.

Shawbrook will use the funds to strengthen its balance sheet and expand its lending into new UK markets. It specialises in lending to small and medium-sized enterprises (SMEs) who find it difficult to secure loans from High Street banks.

The bank made a pre-tax profit of £49.1m in 2014, up from £16.8m in 2013 and a loss of £7.1m in 2012.

It is the latest challenger bank to join the London Stock Exchange, after the likes of Virgin Money, TSB and OneSavings Bank all listed this year.

Another challenger bank, Aldermore, pulled its plans to float on the Stock Exchange after markets showed signs of problems, following the Ebola crisis and growing tensions in the Middle East.