Investec has agreed to sell its UK subprime mortgage business Kensington Group to private equity firms Blackstone and TPG for £180 million in cash.
The sale come as part of the firm’s strategic objective to simplify and restructure its specialist banking business and reduced its assets within its legacy non-core business.
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The sale includes Kensington’s mortgage origination platform, brand, operations, employees, and its regulated and operating subsidiary entities and excludes Investec’s Irish sub-prime subsidiary Start Mortgages.
However, Keith Street will continue to manage the Kensington mortgage business.
Subject to anti-trust and regulatory approvals, the transaction is expected to complete by the end of 2014. The proceeds from the sale will be used in the UK specialist banking operations.
Upon completion of the transaction, Ian Henderson, former head of Shawbrook, will join Kensington as its new chief executive and Investec’s common equity tier 1 ratio will increase by approximately 1%.
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By GlobalDataAt the same time, Blackstone and TPG are planning to boost Kensington’s lending to individuals and landlords, developing the resurgent UK housing market.
Kensington was acquired by Investec in August 2007 for £283 million.
