Investec has sold mortgage business Kensington Group, removing £3.7bn of assets and associated liabilities from its books.
Private equity firms Blackstone and TPG bought the lender, along with other mortgage portfolios, in a £180m cash deal.
The sale is in line with Investec’s strategy to ‘simplify and reshape its specialist banking business’, the company said.
The deal will ‘substantially’ lower the assets held in its legacy non-core business, it said. The portfolios’ net assets were £165m at the end of March, while gross assets totalled £3.7bn.
Investec’s capital adequacy ratio is expected to rise from 8.8% to 11.3% after the mortgage deal and the sale of its Australian arm.
Blackstone and TPG said they intend to build on Kensington’s existing residential and buy-to-let business and broaden its specialty finance facilities.
Ian Henderson, former chief executive of specialist bank Shawbrook, has been appointed group chief executive to lead development.
Kensington chief executive Keith Street, who remains in charge of the lender, said Investec was ‘a supportive parent’ through the financial crisis. The deal with Blackstone and TPG presents ‘an exciting opportunity’ to develop the company, he added.
Investec, which has offices in Leeds and Sheffield, acquired Kensington in 2007. Skipton-based financial outsourcing firm HML currently has a five-year contract to service Kensington’s mortgage portfolios.