Lloyds Banking Group announced The Co-operative Group as preferred bidder for its EC mandated divestiture of 632 branches, while also progressing an initial public offering in tandem ahead of the November 2013 EC timescale. Paragon Group continued its portfolio acquisition strategy with the acquisition of a closed UK consumer credit card receivables portfolio from MBNA Europe Bank.
Cross-border activity returned with US bank Wells Fargo acquiring UK asset based lender Burdale in a £0.6bn acquisition from Bank of Ireland, and German based Wirecard Group acquiring the prepaid cards business of Newcastle building society.
Northern Rock finally concluded a £747m sale to Virgin Group backed by US billionaire investor Wilbur Ross and Abu Dhabi investment fund Stanhope Investments. A further £250m could also be paid subject to a future sale / float. Lloyd Bank has sold £1bn of distressed property loans in Australia and New Zealand to Goldman Sachs and Morgan Stanley. Palatine Private Equity’s portfolio company MoneyPlus Group announced the completion of four IVA debt management infill acquisitions in the four months since its MBO and Sterling Green agreed to sell the majority of its debt management book to IVA support provider DRSP.
NBNK, the start up banking venture, announced plans to submit a bid for Northern Rock following the lifting of the Government’s ban preventing it making an offer. However, this bid is conditional on success in the Lloyds auction where NBNK are under pressure to raise their £1.5bn offer.
Lloyds Banking Group’s £1bn basket of commercial property debt has attracted interest from four parties who remain interested at around 35% of the loans’ face value. Nationwide Building Society has acquired part of Bank of Ireland’s UK residential mortgage portfolio in a £1.1bn deal covering the transfer of over 14,000 Bank of Ireland mortgage customers and Paragon Group acquired a portfolio of unsecured loans from RBS for £43.2m. Yorkshire Building Society completed the acquisition of the Egg mortgage & savings book and brand. Finally enforcement firm Philips Collection Services was acquired by Serco.
Private equity remain active with Duke Street-backed debt purchaser Marlin Financial Group investing c. £45m in a portfolio from a major UK bank including around 40,000 accounts and Inflexion-backed Harrington Brooks acquired debt management service provider Debtsure.
The Co-Op Group, Sun Capital and NBNK continue to assess bids for Lloyds Bank’s branch disposal including the C&G and Intelligent Finance brands plus a share of UK current accounts. NBNK and Sun Capital are also understood to have looked at the UK assets of National Australia Bank (Clydesdale & Yorkshire Banks) ahead of final bids for Lloyds. The FSA has now approved the Yorkshire and Norwich & Peterborough building society merger to complete on 1 November 2011.
Cyrus Capital (formerly Och-Ziff Friedheim) acquired a majority stake in UK contingency collection services business Sigma Financial Group and Bluestone Group acquired debt collection agency Close Credit Management. Värde Partners have acquired non-standard credit card provider SAV Credit from Palamon / Morgan Stanley / Electra and are also an investor in debt purchaser Experto Credite which acquired the UK credit management operations of Intrum Justitia.
Private equity continues to be active with Towerbrook Capital Partners acquiring a majority stake in debt purchase business CapQuest and RBS Equity Finance-owned Whiteaway Laidlaw Bank acquiring specialist lender Link Loans.
In addition GE Capital acquired the UK invoice discounting and factoring arm of Crédit Agricole Leasing & Factoring and Coventry Assurance Society is to transfer its business to another mutual, Healthy Investment, citing the increased cost of financial regulation.
Banking M&A continues to be active with major activity around Lloyds Banking Group, Northern Rock and Citigroup’s piecemeal disposal of Egg.
Initial interest appears to have narrowed on Lloyds’ 632 branch disposal with only NBNK (headed by Lloyd’s of London chairman Lord Levene), Co-operative Financial Services and Hugh Osmond (backed by Sun Capital) understood to remain in the process. Northern Rock rumoured to be in the running. Buy-to-let lender Paragon is considering a bid for Northern Rock or its loan portfolio and Egg continues to be sold piecemeal to Yorkshire Building Society (Egg’s mortgage and savings business), Barclays (Egg’s credit card accounts) and Britannica Recoveries (Egg’s loans portfolio).
Palatine Private Equity backed the management buy-out of MoneyPlus Group, a leading debt management service provider. Ryder Systems Inc. acquired the vehicle leasing and rental business Hill Hire plc from Lloyds Banking Group. George Osborne, UK Chancellor, announced that the UK government was launching a sale process for Northern Rock plc. ClearDebt Group plc acquired the individual voluntary agreement (IVA) portfolio of Invocas Group plc. TDR Capital acquired debt purchase and collection firm Lowell Group in a secondary buy-out.
Virgin Money announced that it planned to make a formal bid for the 632 branches that Lloyds Banking Group was required to dispose of by the EU in return for the state aid received following the credit crisis in 2008.
AnaCap, the specialist financial services private equity firm, acquired Cabot Financial from Citi and subsequently merged it with its existing portfolio company in the debt purchase and collection market, Apex Credit Management. Borro, a short-term secured lender, raised £7.5m in second round funding from Augmentum Capital, Eden Ventures and Rockridge. Barclays acquired the UK small business credit card portfolio of MBNA. Countrywide acquired Mortgage Intelligence, a mortgage distribution platform servicing more than 6,500 intermediaries. Paymex Group sold its individual voluntary agreement (IVA) portfolio to Grant Thornton. Yorkshire and Norwich & Peterborough Building Societies announced their intention to merge.
Barclaycard acquired the entire credit card portfolio (incl. £2.3bn of gross receivables) from Citi-owned Egg Banking plc. Whiteaway Laidlaw Bank acquired the new business platform from Commmercial First Mortgages. Two private-equity owned companies, Maven-owned Property Service Partnership and Citi-owned Fieldcall, merged to form a prominent player in the debt collection and field counselling market. Qatar Islamic Bank, already a c.81% shareholder in Islamic Bank of Britain plc, announced an offer to acquire the whole bank, valuing it at c.£25m.
Wonga, the online short-term small loan provider, raised £73m in third-round founding, led by Oak Investment Partners. Manchester Building Society sold Whiteaway Laidlaw Bank (now rebranded Shawbrook) to the RBS Special Opportunities Fund. Cheval Bridging Finance was bought out by its management and a consortium of investors. Cattles plc was acquired by Bovess Limited, a special purpose vehicle set up to manage the orderly restructuring of the group on behalf of its creditors.
US-based Dollar Financial Corp. announced the acquisition of PaydayUK, an online payday loans provider for c.£125m. The FSA confirmed the transfer of Kent Reliance Building Society to OneSavings Bank, which is backed by JC Flowers. Gothia Financial Group, backed by Nordic private equity firm Herkules Capital, acquired the debt collection firm BCW Group. RBS agreed the sale of a £3.3bn commercial project finance debt portfolio to Mitsubishi UFJ Financial.