Non-conformists have their day

BPE backs the £270m MBO of Preferred Mortgages. It’s the second big deal involving a non-conforming mortgage lender in a week.

Barclays Private Equity (BPE) has backed the £270m MBO of Preferred Mortgages, a non-conforming mortgage lender. It’s the second big deal for non-conforming mortgage lenders in a week and emphasizes how seriously the sector is being taken.

Preferred was bought from Rotch Property Group, who retain a minority stake. Financial director Phil Hopes and CEO Dennis Pitocco led the MBO.

Earlier this week, GE Capital, the financial services arm of General Electric, paid £200m for mortgage lender iGroup, Britain's second-largest non-conforming mortgage provider, with about £1.6bn worth of assets and 52,000 clients.

BPE claims non-conforming mortgages are growing at about 20 per cent annually. On-conforming mortgages are ideal for people who cannot borrow from traditional high street lenders because of their personal or financial history, which may include a history of self-employment or credit problems.

Home ownership among the swathes of population that fit into these categories is on the up, driven in part by increases in the number of self-employed and the success of council house right-to-buy schemes.

PricewaterhouseCoopers and Pinsent Curtis Biddle were advisors to BPE. Rotch Property Group were advised by Hawkpoint Partners and Bird & Bird.