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Private Equity Buys Another UK Mortgage Business

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January 8, 2015

There has been plenty of activity in the mortgage business sector recently and Wednesday evening saw reports of yet another deal. Private equity firms Blackstone and TPG acquired Acenden from the administrators. The deal is the second buyout by the two private equity firms in the UK lending market.

 

The Rocky Road to Recovery
Acenden hasn’t had the easiest of times in recent years, as it used to belong to Lehman Brothers. The bank, which became one of the biggest casualties of the financial crisis in 2008, used to be in charge of the mortgage business. After Lehman Brothers went bust, administrators have been looking after the firm.

 

The UK firm, PwC, has been looking after the UK branches of the bank and told newspapers last year that the company is set to have £5 billion surplus after repaying banks and hedge fund managers.

 

According to the Telegraph, the company currently has over 64,000 loans under management, with a total worth of around £5.4 billion. The company employs nearly 400 staff located in London and High Wycombe, as well as Dublin, Ireland.

 

The Details of the Deal
The two US-based private equity firms are acquiring the company in a deal which details are still unknown. According to Financial News, the deal is set to be finalised later this year, but neither party has so far provided a comment on the financial details.

 

The two firms bought another UK subprime mortgage lender last year and it is thought Acenden will work under this company. The company in question was Kensington Group, with the deal being worth £180 million.

 

According to Mortgage Solutions, Acenden will start mortgage servicing for Kensington Group, as soon as the deal gets a regulatory approval. Despite the speculation, a Kensington Group representative told, “We are aware that Blackstone and TSSP have also entered into an agreement to acquire Acenden which we understand will continue to be operated as a separate and distinct company with separate regulatory authorisation.”

 

Comments on the Deal
Although the parties involved have been quiet over the finer details of the deal, the parties published a press release on Wednesday. The chief executive officer of Acenden, Amany Attia, told, “We are excited to work with Blackstone and TSSP and believe that Acenden is well placed to benefit in the long term from the collaboration with our new shareholders.”

 

Putting Money at Work

The deal is seen as another example of private equity firms trying to put their funds to work. The UK market has been fiercely crowded and last year saw a drop in private equity deals. According to data, private equity firms took part in 202 deals in the UK market, worth nearly £13.3 billion. In the previous year, there were 214 deals worth £14.6 billion.

 

Despite the smaller number of deals, private equity funds were able to fundraise a record amount of money last year, as the latest Preqin data shows. Furthermore, it looks like this year is already off to a busy start, as quite a few deals have already been reported globally and in the UK.

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