Banking remained active with Secure Trust Bank announcing the acquisition of V12 Group, the retail point-of-sale lender, for £3.5m and SAV Credit, the specialist credit card provider, acquiring the mortgage and savings bank Church House Trust from Virgin Money, subject to regulatory approval. In addition, the Paragon Group confirmed that it was considering the acquisition of Hampshire Trust Plc, a wholly owned banking subsidiary of National Counties Building Society, and NBNK Investments announced a proposed £8.3m share subscription by WL Ross & Co.
Elsewhere, Lloyds Banking Group continued to divest non-core assets with the sale of a €380m non-performing Irish commercial real-estate portfolio to CarVal Investors. Nottingham Building Society and Shepshed Building Society announced that they had reached agreement in principle to merge. Zopa, the peer-to-peer lender, announced a new funding round led by Augmentum Capital, itself backed by RIT Capital, and MoneyPlus Group continued its acquisitive growth with the acquisition of debt management company Personal Touch Debt Solutions, the sixth acquisition since its management buy-out supported by Palatine Private Equity.
Banking remained active with continued focus on deleveraging. ING announced that it was closing its asset finance business ING Lease (UK) to new business from the end of November and putting the existing portfolio into run-off. Lloyds Banking Group was reported to be considering strategic options for its 60% shareholding in St. James’s Place and continued to reduce non-core assets with the sale of a £1.466bn portfolio of distressed Irish commercial real-estate loans to Risali Limited, an affiliate of Apollo Global Management, for £149m. RBS was also reported to have appointed advisers for the EU mandated sale of 316 branches following Santander’s withdrawal.
However, challenger banks continued to evaluate growth opportunities with Secure Trust Bank announcing a £20m equity placing to support its strategy, highlighting that it was in exclusive discussions to acquire a retail point-of-sale finance provider and also a collections business.
Elsewhere, Hoist Kredit AB entered the UK debt purchase and collection market through the acquisition of Robinson Way. Key Retirement Solutions, the financial services specialist for people approaching retirement, acquired Annuity People, a leading annuity broking service for IFAs, and, as disclosed last month, GTCR, the Chicago-based private equity firm, acquired installment credit provider Premium Credit Limited from MBNA Europe. Total asset value was c. £900m.
Retail banking remained active, albeit for different reasons. Barclays acquired ING Direct UK, the online UK retail business of ING, comprising £10.9bn of deposits and £5.6bn of mortgages, with the latter acquired at a c. 3% discount to book value. However, Santander withdrew from its purchase of 318 RBS branches, originally agreed in August 2010 at a £350m premium over the net assets. Virgin Money, Nationwide and JC Flowers are now rumoured to be interested in the EU-mandated disposal.
Consumer finance was also active with Rutland Partners acquiring Buy As You View for c. £33m from a syndicate of banks. Morses Club, the home collected credit business, which is backed by RCapital acquired the book debt assets of NFL Direct Limited, its second acquisition in four months. Online asset lender borro raised £20m additional loan financing from Octopus Investments following a £16m fundraising round from a venture capital consortium led by Canaan Partners in order to accelerate growth in the UK and US markets.
Elsewhere, credit insurance broker EFCIS acquired Demergo, the commercial credit management consultancy and just after the month-end, GTCR, the Chicago-based private equity firm, acquired installment credit provider Premium Credit Limited from MBNA Europe. Total asset value was c. £900m.
The challenger banks continued to be active with OneSavings Bank acquiring Prestige Finance and Swingcastle, specialist second charge mortgage lenders, with gross assets of £68.1m.
Paragon Group’s debt purchase subsidiary Idem Capital made its eighth portfolio acquisition, acquiring a UK credit card receivables portfolio from MBNA Europe Bank for up to £16.9m, while separately continuing its forward flow agreement with RBS. In the debt collection space, Winterhill Largo acquired Sovereign Credit Management.
In the debt management sector, MoneyPlus Group, backed by Palatine Private Equity, continued its acquisitive growth strategy through the acquisition of Debt Free Me. In other sectors, Albemarle & Bond acquired online provider Early Pay Day Loans for £1.2m and Mortgage Intelligence acquired FYB Network, the mortgage broking network.
Banks continued to dispose of non-core operating businesses and assets: Lloyds Banking Group sold a £1 billion private equity investment portfolio to Coller Capital, and Citi announced an agreement to sell its Diners Club card issuing businesses in UK and Republic of Ireland to Affiniture Cards Ltd.
Scottish Building Society and Century Building Society announced a merger with the enlarged group retaining the Scottish Building Society name. The merger is expected to be effective from February 2013, following approval by Century’s members and by the FSA.
The short-term credit market continued to be active with US-based Check into Cash acquiring Cash & Cheque Express Ltd with its UK chain of 16 stores.
Lloyds Banking Group announced that it had reached heads of terms with the Co-operative Group for the EU mandated sale of 632 of its branches, comprising 4.8m customers, a c. £24bn balance sheet, and TSB and Chelteham & Gloucester brands. While the Co-operative Group will pay an initial £350m plus an earn-out of up to £800m over the period to 2027, Lloyds will transfer the business with equity capital of £1.2-1.5bn.
Northern Rock (Asset Management) plc agreed to sell a £465m portfolio of UK residential mortgages to Virgin Money at a price of par. The proceeds of the sale will be used directly to repay the NRAM government loan.
Elsewhere, RJD Partners announced the secondary buy-out of Harrington Brooks, a leading provider of debt management solutions, from Inflexion Private Equity.
June saw renewed activity in the banking sector. Lloyds Banking Group announced that it was now in exclusive talks with the Co-operative Group over the EU mandated sale of 632 of its branches with c. 5 million customers. As a result, rival bidder NBNK Investments announced it was planning to wind-up the company and cancel its AIM listing, having been unable to find a suitable acquisition opportunity.
Secure Trust Bank plc acquired Everyday Loans, a consumer finance business operating from a national network of 25 offices, from Alchemy Partners. The Islamic Bank of Britain plc announced that it had received an approach from its 88.4% shareholder Qatar International Islamic Bank regarding a potential offer for the outstanding shares. There was also a new bank authorised targeting SME lending, Cambridge & Counties Bank, following the transfer of Pensions Bank’s customer deposits and lending books.
Elsewhere, Money Advice Group acquired debt-management business No Debt Now, payday lender Wonga was rumoured to be considering an IPO of the business on a US stock exchange, and MoneySupermarket.com acquired MoneySavingExpert for up to £87m.
It was a relatively quiet month within the lending sector as UK high-street banks continue to focus on core activities, with Barclays’ and Lloyds’ announced disposal of stakes in fund management groups BlackRock and Invista respectively.
RBS has also continued its forward flow agreement with Paragon subsidiary Idem Capital to dispose of non-performing consumer loans. Paragon announced its 2012 half-year results in May, highlighting Idem Capital now as a leading participant in the market with c.£100m invested in the period.
The mortgage market witnessed activity with OneSavings Bank acquiring Interbay Group from Cabot Square Capital, and Mortgage27 attracting a significant investment from Verso Capital Partners.
Lloyds Banking Group announced that its exclusivity agreement with the Co-operative Group for the sale of its EC mandated disposal of 632 branches had expired, but that it continued to hold talks with the Co-op as its preferred bidder. It is also considering a revised offer from NBNK Investments, and continues to prepare for its alternative option of an IPO. National Australia Bank announced the outcome of its strategic review of its UK operations, Clydesdale and Yorkshire banks, having examined the options of an outright sale and growth through acquisition. The result will be to restructure the group focusing on its core retail activities.
Elsewhere, Funding Circle, the peer-to-peer lending platform, secured fresh growth capital from Index Ventures. Debt purchase continued to be active through forward flow arrangements with Paragon acquiring a small portfolio from RBS and Aktiv Kapital acquiring a £228m non-performing consumer loan portfolio.
The asset finance market saw renewed activity with Shawbrook Bank acquiring Singers Asset Finance, reportedly increasing its loan book by £350m. In addition, Aldermore Bank acquired a leasing receivables portfolio for £11.5m from PCF Equipment Leasing, a wholly-owned subsidiary of Private & Commercial Finance Group. The debt purchase market continued to be active with Paragon continuing its forward flow agreement with RBS, and Aktiv Capital acquiring a £470m non-performing consumer loan portfolio from MBNA.
Lloyds Bank agreed to sell a £500m leveraged loan portfolio to Bain Capital’s Sankaty debt investment arm. Lloyds Bank also provided an update on Project Verde, the EC mandated disposal of 632 of its branches, citing its continued preference to sell to the Co-Operative Group over an IPO.
National Australia Bank announced a strategic review of its UK operations, comprising Clydesdale and Yorkshire banks. Bank of Ireland was reported to be evaluating a sale of two of itsUK mortgage portfolios, valued at c.£2 billion.
There was activity in the debt management space with RG Debt Management Services (trading as Debt Line) completing a BIMBO backed by Milestone Capital Partners. In addition, insolvency support services providers Invocas plc launched a formal sales process of the company, following its delisting in June 2010. In the debt collection sector, BCW Group acquired Utility Management Services, a utilities debt collection firm, from EnServe. Paragon, through its Idem Capital Securities subsidiary, continued to acquire further unsecured consumer loans from RBS under a forward flow agreement.
S&U plc acquired the home credit business of Norton Financial Services.
Cross-border M&A was active with US debt purchase business Portfolio Recovery Associates (PRA) entering the UK market through the acquisition of Mackenzie Hall for c.£33.5 million, and Sumitomo Mitsui Financial Group acquiring RBS Aviation Capital, the aircraft leasing and financing division of RBS, for c.£4.7 billion. STA International, the debt collection service provider, bought out the minority shareholding held by Graydon UK. Paragon continued its loan purchasing activities with the acquisition of further unsecured consumer loans from RBS under a forward flow arrangement.