Blackstone and TPG bag UK mortgage lender

The US pair have agreed to pay £180m in equity and debt to Investec to acquire UK mortgage finance company Kensington.

The Blackstone Group and TPG Special Situations Partners have acquired UK residential mortgage lender Kensington from Investec for £180 million ($290 million; €225 million), according to a statement and regulatory filing on Tuesday.

The sale price represented a small premium to the group’s tangible net asset value of £165 million as of 31 March, Investec said in its filing.

The bank originally paid £283 million for the business in 2007, just before the credit crisis.

Blackstone, investing via its Tactical Opportunities Group, and TPG provided a mix of equity and debt to fund the transaction.

The pair fought off competition from other bidders thought to include Lone Star Funds, Virgin Money, and Goldman Sachs. The auction was managed by Fenchurch Advisory Partners.

Blackstone and TPG plan to develop Kensington’s mortgage lending business and broader specialty financing capabilities, they said. They have appointed former Shawbrook head Ian Henderson as the group’s new chief executive.

David Blitzer, head of Blackstone Tactical Opportunities, said in the statement: “Kensington presents an exciting opportunity to back a high quality management team and to invest in the UK mortgage market. Kensington is a best-in-class specialist lender with an established track record in the UK and strong customer relationships. We will invest in growing the business in the mortgage space as well as extending the range of its activities in specialty finance.”