(Alliance News) - LSL Property Services PLC on Friday said it formed a GBP200 million mortgage brokering joint venture with Pollen Street Capital.
The venture, which will be called Pivotal Growth, seeks to become a "leading national mortgage broker powered by market leading technology, first class regulatory compliance and exemplary customer service," LSL said.
Shares in LSL, an estate agent and financial services provider, were up 5.5% to 354.30 pence in London.
Pivotal Growth will have at least GBP200 million to spend on acquisitions. LSL and Pollen Street will each have a 48% equity stake and provide loans to Pivotal Growth. LSL has committed a total of up to GBP33.5 million, while Pollen Street has committed up to GBP62.4 million. The rest of the money will come from external debt finance.
LSL said the mortgage market is fragmented, and it has identified 50 larger firms which could be acquired and expanded by Pivotal Growth. The joint venture would then target smaller firms. LSL believes there are opportunities to sell more insurance products, grow its share of the remortgage market, and generate recurring income.
Simon Embley will step down as LSL chair to become chief executive of Pivotal Growth. Deputy Chair Bill Shannon will be promoted in his place.
"The establishment of the Pivotal Growth joint venture with Pollen Street Capital will enable us to establish a leading position in the provision of direct-to-consumer advice," LSL Chief Executive David Stewart said.
By Ivan Edwards; ivanedwards@alliancenews.com
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