Buy to Let

Buy-to-let lender Charter Court Financial Services to unveil £500m flotation

A buy-to-let mortgage lender which cancelled a £400m auction last year amid a row over Brexit is about to unveil plans for a London stock market listing.

Sky News has learnt that Charter Court Financial Services, the owner of the Exact and Precise mortgage brands, is likely to announce its intention to float as soon as this week.

The move could give Charter Court a market value of about £500m, sources said this weekend.

It was unclear, however, how much it would seek to raise from the sale of new shares to investors.

The arrival of another UK challenger bank on the London market will come despite a slowdown in buy-to-let mortgage lending following Bank of England measures to cool the market.

Charter Court, which is owned by the hedge fund Elliott Associates, is working with Barclays and Royal Bank of Canada on the float plan.

Sir Malcolm Williamson, a City grandee who has held roles at Standard Chartered and Aviva, has joined Charter Court’s board and is expected to be named as its chairman, sources said.

EY, the professional services firm, is also helping to co-ordinate the listing preparations.

Initial meetings between Charter Court’s management, led by chief executive Ian Lonergan, are said to have elicited an enthusiastic response from City investors.

That follows Elliott’s decision to scrap an auction of the company shortly before last year’s European Union referendum, when bidders demanded that a Brexit clause allowing them to cut the price they paid for the business be inserted into any deal.

Elliott refused, and the auction collapsed.

BC Partners, Varde Partners and Warburg Pincus were among the buyout firms which had tabled offers for the mortgage lender, but they fell substantially short of the £400m price-tag set by Elliott.

Charter Court made an underlying profit before tax of just over £50m in 2016, up 76% on the previous year.

Buy-to-let lenders are contending with a new set of powers recently handed to the Bank of England, such as stricter affordability checks and interest rate ‘stress tests’, which follows concerns about an overheating of the market.

However, Charter Court benefited from being a big user of the central bank’s Term Funding Schemes, which provides cheap loans to lenders.

Announcing results in April which showed a near-doubling in mortgage origination in 2016, Mr Lonergan said:

“We expect that the economic uncertainty following the referendum on leaving the EU combined with the impact of regulatory change in the buy-to-let mortgage market will lead to a degree of disruption for many of those companies which participate in this sector.”

Charter Court declined to comment on Sunday.

Sky News (c) Sky News 2017: Buy-to-let lender Charter Court Financial Services to unveil £500m flotation

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