Sub-prime lender Future Mortgages has been acquired by global financial services corporation Citigate. The terms of the transaction have not yet been released, but it is understood that over £250m worth of receivables formed part of the deal.
Future is the latest in a growing group of sub-prime lenders to be bought by larger companies, following similar disclosures by Platform and igroup.
Brian Pitt, at Future Mortgages, said: ‘We were originally backed by venture capitalists and after four or five years in the business, it was the right time in the cycle for them to realise their capital. Consolidation is a natural progression of the market, particularly as more and more bigger companies are seeing the maturity of the sub-prime sector.’
Terry Williams, head of UK consumer finance business at Citigate, said: ‘The UK consumer market continues to offer attractive opportunities. We have major ambitions in the mortgage market and Future provides an excellent fit, with a strong record of growth, a positive reputation in the industry and an excellent team.’
The deal is the second UK acquisition made by Citigroup in the last 12 months. At the end of 2000, the company bought Associates, a personal finance company. Pitt said: ‘We will be working closely with it, but the Future brand is safe. We will expand our product range in the next few months, and look at our pricing structures because the cost of funds has dropped dramatically.’
Colin Sanders, chief operating officer at igroup, said this latest announcement confirms the growing legitimacy of the sub-prime sector in the eyes of consumers, and the prospects for further growth. ‘With many high street lenders acquiring non-conforming lenders this can only be a good thing for the sector. This will result in better resources being made available which, in turn, will mean the borrower will be offered enhanced and more competitive deals,’ he said.