Grainger sells £325m equity release business to private equity


Two private equity firms are getting into the equity release business through a £325m deal with Grainger, the housing group that wants to focus on private renting.

Electra Private Equity and Patron Capital Partners will take on a portfolio of more than 3,600 properties covered by equity release products, which are chiefly used by pensioners to unlock value in their homes to fund retirement.

As part of their deal to buy Grainger Retirement Solutions, the two firms will take on £150m of secured debt and pay Grainger £175m in cash.

“This deal, which follows our acquisitions of shared equity mortgage portfolios from Galliford Try and Keepmoat earlier this year, provides us with a strong business that has an extensive portfolio and attractive exposure to the UK residential property market, particularly given the ageing population,” said Keith Breslauer, managing director of Patron Capital.

With a shortage of suitable housing and an ageing population putting further pressure on the property market, a number of large firms are starting to buy into retirement homes and equity release mortgages.

Electra and Patron have created a joint venture named Turbo Group, which must be approved by the Financial Conduct Authority before the deal can complete. The firms expect to finalise the transaction before the end of May.

Grainger, the country’s biggest listed residential landlord, said it will book a profit of £55m on the sale, which it will use to reduce its debts and invest more in its private rented business.

"It will materially reduce our financial and operational costs, including costs associated with running a FCA regulated business, and will significantly strengthen our balance sheet and capacity for investment," said Helen Gordon, chief executive of Grainger.

The sale does not include Grainger's interest in the Church Housing Assistance for the Retired Ministry Scheme, the loans portfolio that it acquired from the Church of England in 2007.