Barclays Bank UK has agreed to acquire UK specialist mortgage lender Kensington Mortgage Company (KMC) for £2.3 billion.
Barclays will acquire the residential mortgage lender from companies controlled by funds managed by Blackstone Tactical Opportunities Advisors and funds affiliated with Sixth Street Partners.
The transaction is subject to regulatory approval and is expected to complete in late Q4 2022 or early Q1 2023
”Assuming completion of the transaction occurs at the beginning of December 2022 and the KMC Mortgage Portfolio comprises approximately £2 billion of loans at that date, the total consideration payable by Barclays Bank UK under the transaction agreements is expected to be approximately £2.3 billion,” said Barclays in a statement.
Alongside acquiring KMC, Barclays Bank UK has also agreed to acquire a portfolio of UK mortgages consisting primarily of mortgages originated by KMC from October 2021 to completion of the acquisition of KMC (the KMC Mortgage Portfolio and together the transaction).
The KMC mortgage portfolio totalled £1.2 billion as at 31 May 2022 (comprising approximately 70% owner-occupied and 30% buy-to-let residential mortgages) with a weighted average LTV of 77% at origination.
”The acquisition will enable Barclays to broaden its product offering and capabilities in the UK mortgage market, extend the number of customers we can serve and grow mortgage originations to better utilise our strong UK funding base,” the company said.
Matt Hammerstein, CEO of Barclays Bank UK, commented: “The transaction reinforces our commitment to the UK residential mortgage market and presents an exciting opportunity to broaden our product range and capabilities. KMC is 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. KMC complements our 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. The transaction should generate attractive returns for Barclays over the medium term as the KMC Mortgage Portfolio increases in size through the ongoing origination of new mortgages. We look forward to KMC management and employees becoming part of the Barclays group.”