Pacific Investment Management Company (PIMCO) has acquired a minority stake in the UK specialist lender Step One Finance.
Established in 2010, the UK-based firm provides loans in the second-charge mortgage market across England, Scotland and Wales. Standards loans provided by the firm to homeowners are up to £150,000 [€193,000 and $217,000] , but the firm is able to provide capital in excess of that amount.
Parties involved in the transaction declined to disclose the precise stake acquired and the deal amount.
The latest injection of capital will allow Step One to increase its presence in the second-charge market. Others investors in the firm include Credit Suisse Asset Management, Pacific Advantage Capital and 080808 Capital.
Michael Childress, co-founder of Step One, told PDI that the deal represents a vote of confidence in the firm’s operations in what he described as a “niche market”.
He explained that before the 2008 financial crisis the UK second-charge mortgage market had annual origination volumes of around £6 – £7 billion, but plummeted to less than £400 million during the depths of the crisis. He said that the market has since made a recovery and has an origination volume of around £1 billion per annum today.