Wed, 28 Jul 2021 | BUSINESS SALE
Starling Bank has made its first acquisition, with a £50 million cash and share deal for buy-to-let mortgage provider Fleet Mortgages. The takeover is part of Starling’s plan to grow through forward-flow arrangements, lending and strategic acquisitions, with the Goldman Sachs-backed bank aiming to launch an IPO within two years.
Fleet Mortgages is a provider of mortgages for buy-to-let landlords via adviser distributions channels. Following the acquisition, the company’s day-to-day operations and management team will remain unchanged, but Starling will become the sole funder for future originations, enabling the firm to tap into the bank’s deposit base.
Starling Bank has a deposit base of around £6.7 billion and is aiming to deploy this to continue its rapid expansion thus far. This growth has been driven in part by its participation in government-backed rescue loan schemes during the Covid-19 pandemic.
The acquisition of Fleet Mortgages is seen by the bank as being the first in a series of takeovers. Founded in 2014, Hampshire-based Fleet Mortgages has originated £2.3 billion mortgages to date, currently has around £1.75 billion of mortgages under management and forecasts that it will originate a further £800 million this year.
Starling Bank CEO Anne Boden said: “The acquisition of Fleet Mortgages is the start of our move into mortgages as an asset class and builds on a number of forward-flow arrangements that we’re doing with leading non-bank lenders.
“Fleet’s existing management team will remain in place and Fleet will continue to operate as a stand-alone company, keeping the original name and brand. We’re buying Fleet because it is very good at what it does, not because we want to change it.”
Fleet Mortgages CEO Bob Young added: “We are very pleased to be announcing the acquisition of the business by Starling Bank which will deliver a significant benefit to the business, our intermediary partners and their landlord clients.
“Starling Bank will take over all of our funding, allowing us to focus on achieving our significant and ambitious lending and growth targets. This is a natural progression for our lending business, with both Starling and Fleet sharing a very similar cultural fit, and provides us with a very strong lending base from which to work and to deliver for our staff, our adviser partners and our landlord customers.”
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This established IFA is assigned to one major platform ensuring a very smooth transition of client assets.
This is a highly profitable business with EBIT percentage of 33%, meaning money can be recouped quickly after a purchase.
With advisers and back-office staff in place, this business can be purchased and will keep running efficiently.
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