Blackstone and TPG near deal for mortgage lender Kensington
US asset managers Blackstone and TPG are close to buying the UK subprime mortgage lender Kensington from its owner Investec, the Anglo-South African financial services group, in an indication of international investor interest in the British market.
The deal, which could be sealed as early as this week, comes at a time of renewed UK house price appreciation, particularly in London.
Investec put Kensington up for sale earlier this year, almost seven years after its ill-fated acquisition of the business on the eve of the financial crisis.
It paid £283m in cash and shares for the company in May 2007. The sale could still slip to later this month or fall apart, and a final sale price could not be ascertained.
When Investec launched the sale process in February, analysts pegged the value of Kensington at between £200m and £250m.
“With the ongoing recovery in mortgage lending and wholesale funding markets we believe that Kensington is now well placed to continue growing and that this growth potential may be better realised under different ownership,” Stephen Koseff, chief executive of Investec, said at the time.
Blackstone and TPG are expected to invest in expanding Kensington’s lending, which includes higher-risk loans to individuals than those traditionally made by the high street banks, plus buy-to-let mortgages for landlords.
The deal was first reported by Sky News. Investec and the bidders declined to comment.
Among the firms reported to have looked at Kensington were Lonestar, a US property investor, Virgin Money and Goldman Sachs. The auction was run by Fenchurch Advisory Partners, a corporate finance boutique.
Mr Koseff has been restructuring and simplifying Investec to concentrate on banking and asset management, and in the process shedding crisis-era loan books that have weighed down results.
The company said in May that Kensington still had £1.2bn of mortgages on its books, though it has been able to sell about £2bn in assets through the securitisation market.
Latest figures show the UK housing market accelerating, despite tighter lending requirements imposed by regulators. House prices jumped 1.4 per cent on the month in July, according to the Halifax, pushing the annual rate of inflation up to 10.2 per cent in the three months to July – the fastest since September 2007.