Private equity firms Patron Capital and Electra Partners have bought the home reversion equity release business of residential landlord Grainger for £325 million.
The purchase of Grainger Retirement Solutions by joint venture vehicle Turbo Group Holdings is subject to regulatory approval by the Financial Conduct Authority and is expected to complete by the end of May. Patron will be the operating partner for the company.
The £325 million purchase price comprises £175 million in cash and the buyers will take on £150 million of existing debt secured on the assets with an average cost of 6.9 percent. Patron and Electra will each invest £45 million, with new debt arranged with Barclays.
The deal sees Patron and Electra invest in the UK residential market through the financing of homes. Grainger Retirement Solutions is an originator, consolidator and servicer of home reversion equity release plans. The current portfolio comprises more than 3,500 properties.
“As property companies increasingly look to focus on pure development activity, we are taking advantage of the significant opportunity to acquire finance-related businesses and portfolios,” said Keith Breslauer, managing director of Patron Capital.
“This deal, which follows our acquisitions of shared equity mortgage portfolios from Galliford Try and Keepmoat earlier this year, provides us with a strong business that has an extensive portfolio and attractive exposure to the UK residential property market, particularly given the aging population,” Breslauer continued.
“The investment is a strong fit with Electra’s long-term capital. It offers an attractive and low-risk return, as well as some exciting opportunities to increase Retirement Solutions’ scale through M&A,” added Alex Fortescue, chief investment partner at Electra Partners.
EY Real Estate Corporate Finance advised on the transaction.