Barclays Bank has agreed to acquire specialist mortgage lender Kensington Mortgage Company (KMC) in a £2.3bn deal.
Kensington is currently controlled by funds managed by Blackstone Tactical Opportunities Advisors L.L.C. and funds affiliated with Sixth Street Partners LLC.
The transaction, which is subject to regulatory approval, is expected to complete in late Q4 2022 or early Q1 2023.
The acquisition will enable Barclays to broaden its product offering and capabilities in the UK mortgage market, extend the number of customers it can serve and grow mortgage originations to better utilise its UK funding base.
Historically Kensington did not hold mortgages on its balance sheet, however following completion of the transaction it will retain the majority of mortgages that it originates.
Kensington originated approximately £1.6bn of mortgages (excluding retentions) in the year ended 31 March 2022.
Alongside acquiring Kensington, Barclays Bank has also agreed to acquire a portfolio of mortgages consisting primarily of mortgages originated by Kensington from October 2021 to the completion of the acquisition.
The KMC Mortgage Portfolio totalled £1.2bn as of 31 May 2022 (comprising approximately 70% owner-occupied and 30% buy-to-let residential mortgages) with a weighted average LTV of 77% at origination.
Matt Hammerstein, CEO of Barclays Bank UK, said: “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.”
