Buy-to-let lender plots float after Brexit fears halted sale
Charter Court's owners are preparing a float less than a year after cancelling a sale amid a row over Brexit, Sky News learns.
Tuesday 7 February 2017 05:47, UK
A buy-to-let mortgage lender which cancelled a 拢400m auction last year because of a row over Brexit has begun drawing up plans to list on the London stock market.
Sky News has learnt that Charter Court Financial Services, the owner of the Exact and Precise mortgage brands, has drafted in investment bankers to work on an initial public offering later this year.
Insiders said on Monday that Charter Court, which is owned by the hedge fund Elliott Associates, had appointed Barclays and Royal Bank of Canada to oversee the float plan.
EY, the professional services firm, is also understood to be helping to co-ordinate the listing preparations.
The emergence of Charter Court's plans is significant because it reflects the company's belief that it possesses a solid growth story to sell to institutional investors.
Figures published last month by the Treasury suggested that a new tax surcharge in the purchase of buy-to-let properties had done little to dampen appetite for such mortgages.
That sentiment contrasts with expectations ahead of last June's European Union referendum, when bidders for Charter Court 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 a profit after tax of £21.4m in 2015, a figure that was expected to nearly double this year.
A spokesman for Charter Court, who declined to comment on the prospective flotation, refused to provide updated details of the company's financial performance.
Based on the pre-referendum valuations of publicly traded peers such as Aldermore and One Savings Bank, its earnings imply that Charter Court would be worth in the region of £400m.
Prior to the EU vote, Moody's, the credit ratings agency, warned that Brexit "would have a cascading effect by lowering housing demand, which in turn would drive down the cost of rent and increase vacant periods".
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.