Kensington Group to Buy Loans from GE Money Home Lending
Kensington Group, a UK mortgage lender, is on the verge of signing an acquisition deal worth £2.5 billion with General Electric (GE), which would enable it to purchase a part of GE’s finance business.
According to a report in Sky News, Kensington Group wants to purchase a large part of GE Money Home Lending, which the company had decided to sell early in 2015. Reliable sources say that an announcement will soon be made, but simultaneously hinted that some other company could also try to purchase the business.
GE wants to sell a portfolio worth around £2.5 billion active mortgage loans in the UK, and Kensington Group is expected to pay roughly that amount for it. GE has decided to go ahead with the deal because it wants to focus entirely on its industrial business.
GE is chiefly engaged in producing jet engines, but this part of its business suffered intensely when one of its engines caught fire at Las Vegas on Wednesday. GE also manufacturers domestic appliances, wind turbines, and healthcare products.
Kensington, a company that was established in 1994, was purchased by major investment companies TPG Special Situations Partners and Blackstone Tactical Opportunities a year back.
The previous owner of Kensington Group was Investee, which made a financially unsound move by purchasing the company for £283 million in 2007. Investee had made the acquisition at the wrong time, when the financial market had come to a halt.
Before its acquisition by Investee, Kensington Group was a publicly traded firm with a board of executives, including John Maltby, who is currently a part of a group of investment firms that are purchasing a share in 315 branches of the Royal Bank of Scotland.
If Kensington Group’s acquisition deal with GE turns out to be a success, it will benefit both the companies greatly. GE, which is one of the major conglomerates in the US, is quite serious about unloading a huge chunk of its finance business. Ever since it announced its plans, GE had sold assets worth billions of dollars, and plans to sell more assets worth $100 billion by the end of 2015.
So far, it has sold several assets, including a division that lends funds to private equity companies in Europe for $2.2 billion, a deposit book worth $16 billion to Goldman Sachs, loans worth $1.2 billion from UK Home Lending, and its international fleet company for $8.6 billion.
