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Barclays to acquire Kensington Mortgages

  • 24/06/2022
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Barclays to acquire Kensington Mortgages
Barclays has reached an agreement to acquire specialist mortgage lender Kensington Mortgages from funds associated with Blackstone Tactical Opportunities and Sixth Street.

The bank is expected to pay around £2.3bn for the specialist lender, but the exact consideration is dependent on the value of Kensington’s mortgage portfolio upon completion. The transaction is expected to complete in late Q4 2022.

Earlier this year, it was reported that Barclays, Starling Bank, M&G and Pimco were understood to be bidding for Kensington Mortgages’ assets.

The acquisition includes Kensington Mortgages Company Limited and a portfolio of UK mortgages mainly made up of loans originated by Kensington since October 2021.

According to Barclays, Kensington originated around £1.6bn of mortgages in the year ended 31 March 2022 and its mortgage portfolio totalled £1.1bn as of 31 May 2022. This is expected to be £2bn in late Q4 2022.

Around 70 per cent of its mortgage portfolio is owner-occupied and 30 per cent is buy-to-let with an overall weighted average loan to value (LTV) of 77 per cent at origination.

Barclays said the acquisition would make it “one of the few major banks with a specialist mortgage offering”.

Kensington Mortgages specialises in offering mortgages to borrowers with complex incomes, focusing on the self-employed and those with multiple or variable incomes.

Blackstone Tactical Opportunities and Sixth Street have owned Kensington since 2015 and the transaction will be financed from Barclay’s existing resources.

Mark Arnold, chief executive of Kensington Mortgages, said: “This sale marks the start of an exciting new chapter of growth for Kensington. We have a strong track record in the specialist mortgage space, using our proprietary data and tech platform to innovate and grow, and now is a natural point to bring in a partner who can help us to drive our next expansion phase.

“As a major UK bank with a broad reach and offering, Barclays is well placed to support this expansion, whilst the sale will allow it to differentiate itself as a ‘mainstream specialist’ and offer a range of mortgage solutions not available from competitors.”

Matt Hammerstein, chief executive of Barclays Bank UK PLC, noted that the transaction reinforces its commitment to the UK residential mortgage market and “presents an exciting opportunity to broaden our product range and capabilities”.

He added that Kensington was a “best-in-class specialist mortgage lender with an established track record in the UK market, strong broker and customer relationships and data analytics capabilities”.

Hammerstein said the acquisition complemented Barclays’ existing UK mortgage business and broker relationships through the “addition of a specialist prime mortgage originator and the utilisation of our strong UK funding base”.

“We look forward to KMC management and employees becoming part of the Barclays group,” he said.


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