B&C has learnt that specialist bank Investec has sold its stake in a major UK commercial finance broker.
Investec, which is currently in talks to sell Kensington, had acquired a 75 per cent stake in Lease Direct Finance (LDF), the UK provider of commercial finance, in 2010.
Following the transaction, LDF maintained its existing relationships and continued as a brokerage, sourcing transactions to its existing portfolio of lenders, as well as new lenders that entered the market.
In addition, LDF marketed complementary products offered by Investec that fitted within their client’s requirements.
However, in the Group’s investor pre-close briefing, issued on Thursday last week, Investec stated: “Net non-operational costs of approximately GBP6 million (restructuring and other costs relating to Australia and the sale of the trust business, partially offset by profit on sale of Lease Direct Finance in the UK).”
B&C spoke to Investec, which confirmed that the Group had not publicised the sale of LDF and that the sale was indeed finalised earlier this year. Investec also confirmed to B&C that it no longer has any stake in the commercial brokerage.
Over the past year the group has focused on reshaping its business with a view to improving returns and has successfully restructured and/or sold certain businesses. As previously announced, the group is in the process of selling part of its Australian business and Kensington, the group's intermediary mortgage business in the UK.
The Group acquired Kensington, which specialised in low-income loans, from £283 million in 2007, just before the subprime crisis.
The briefing stated: “The potential sale of Kensington is at an early stage in the process and the group expects to provide further information in this regard in the second quarter of this calendar year. Kensington clients continued to be serviced on a business as usual basis.”
CEO Stephen Koseff said: “Our focus over the next period is to execute strategic initiatives while running the businesses quite hard. We have a very clear strategic direction, including the sale of part of the business in Australia and our Kensington business in the UK.
“If that’s successfully completed, we will have a leaner, more focused, less complex and very client-driven organisation that is relevant in core markets.”
Koseff said that there was particular interest in the sale of its UK intermediary mortgage business Kensington, but that it was “very early days”. The group expects to provide further information in this regard in the second quarter of this calendar year.
“Impairments are significantly lower and well on the path to being normalised, with Kensington impairments substantially lower than the previous year,” Koseff commented.
He said that this was a function of improved economic conditions, the shift in lending philosophy in the Kensington business and a significant improvement in the UK housing market.
For the period 31st March 2013 to 28th February 2014, on a group-wide basis, deposits fell 10 per cent to £22.2 billion, an increase of 6 per cent on a currency neutral basis. Core loans and advances decreased 10 per cent to £16.6 billion, an increase of 7 per cent on a currency neutral basis.
The UK Specialist Banking business is expected to report results well ahead of the prior year as a result of a significant decline in impairments. Investec will release its full-year results ending 31st March 2014 on 22nd May 2014.
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