DWF has moved to dismiss suggestions that its decision to consider a public listing has been influenced by the firm's debt levels.

The firm, which is currently mulling an initial public offering (IPO) that could take place in the early part of next year, insists that its plan to take on external capital relates to a desire for further investment in the business and to better incentivise staff.

DWF set out its stance in response to multiple sources telling Legal Week that the firm's pursuit of external capital relates in part to its bank loans.

According to its most recently filed LLP accounts, the firm's bank loans stood at £40.3m for the 2016-17 financial year – double the equivalent figure of £20.3m in 2013-14 and equating to just over 20% of the firm's 2016-17 revenue of £199.3m, one of the highest proportions in the UK top 50.

Virtually all of this debt – £39.9m – was due for refinancing by July this year, with the firm agreeing larger loan facilities with its lenders running through to 2021 after the accounts were filed. Legal Week understands that while the firm successfully renegotiated its lending facilities in January and February this year, two of its lenders – Barclays and Santander – were not included in the new arrangement.

One source with knowledge of the matter said the firm had been discussing a float as "a way to keep its lending banks on side", while a former partner said it amounted to an attempt to "solve the firm's debt problem". Multiple sources suggested that concerns about DWF's debt had  "influenced the timing, if not the desire" of the firm considering going public.

However, in response to a request for comment by Legal Week, a spokesperson for DWF said that suggestions it is considering a listing due to its debt levels are "fundamentally incorrect and completely misguided".

The DWF spokesperson added: "We have been considering a number of strategic options for our business, including the possibility of an IPO on the London Stock Exchange. To be completely clear, we are certainly not considering an IPO for any reason connected to the firm's debt."

The spokesperson added: "The firm recently refinanced through to 2021, but this reflects the confidence of its banking partners rather than any concern over debt levels. We refinanced and have unsecured facilities. If a bank has any concerns regarding our solvency or performance at refinance they would take security – they didn't because they have no such concerns."

DWF's interest in seeking outside investment comes after equity partners were asked to inject funds into the business in September and October 2017 in a "capital reorganisation" aimed at "bringing the firm's capital levels up to date" following rapid revenue growth, according to former partners.

While equity partners agreed to pay in additional capital for the first time in seven years – with the sum paid in understood to equate to about 10% of their annual profit share – plans to raise additional funds from the firm's fixed-share partner rank were abandoned when the firm opted to look at an IPO. Former partners had suggested there was "almost a revolution" in the fixed share rank after an initial request, though the firm denies a serious dispute.

The potential IPO, which is likely to be the largest UK law firm float to date, is one of "a number of strategic options" now being considered, according to the firm.

In a statement, DWF said: "If we were to proceed with an IPO, we believe that it would enable us to achieve our strategic objectives more quickly, while also enhancing our ability to attract and retain the best talent and to incentivise our people by aligning them through offering ownership within the business."