Aldermore had planned to sell about 300 million pounds of shares by Thursday and list the following day with a market value of about 800 million pounds.
But the offer is not yet fully subscribed as investors have held back from backing it and other new listings following a 3-week stock market fall, three people familiar with the matter said on Monday. Britain's FTSE 100 blue-chip share index has fallen 7 percent since Sept. 19.
"It's a tough market out there right now. You've got volatility all around the world," one of the sources said.
The so-called "challenger bank" could postpone the float, cut the offer price or sell fewer shares if demand doesn't meet expectations.
Aldermore declined to comment.
The lender's management and advisers have returned to London this week for the last leg of a roadshow that has mainly been pitched at British and U.S.-based investors.
It had planned to sell about 75 million pounds of new shares in the offer, with existing investors also selling stock. It needs a free float of 25 percent to meet UK listing rules.
Toscafund Asset Management, which owns about 6 percent of Aldermore, and hedge fund Lansdowne Partners, which owns about 2 percent, have said they plan to buy more shares. But any investor holding 5 percent or more does not count towards the free-float requirement, so Toscafund's stake won't count.
Most of the demand should be domestic, but U.S. investors have been drawn to recent share sales by UK retail banks due to Britain's economic recovery and the expectation that interest rate rises will improve banks' profit margins.
IPOS PULLED
Aldermore was founded in 2009 by former Barclays executive Philip Monks and has established itself as a credible newcomer by focusing on lending to small businesses and homeowners. It doesn't have branches.
Italian cosmetics company Intercos and French energy services firm Spie are among several European companies to have dropped their IPOs in recent weeks amid tough market conditions.
Shares in TSB, a "challenger" bank spun out from Lloyds, were last trading at 264p, just above their June IPO price of 260p but below the 280p that Lloyds sold additional shares at last month. OneSavings shares are up 8 percent from their June debut, but have halved their IPO gains in the last month.
Virgin Money is another bank seeking to list this month, and is bigger and more widely known than Aldermore. It will sell 150 million pounds of new shares and is expected to be valued at 1.5 billion to 2 billion pounds.
Aldermore set a price range for its IPO of between 217p and 265p per share, which would value it at between 720 million and 880 million pounds. Credit Suisse and Deutsche Bank are leading the listing, and Lazard is advising.
(Reporting by Steve Slater, Freya Berry and Matt Scuffham)
