June 24, 2022
Blackstone and Sixth Street Agree Sale of Kensington Mortgages to Barclays Bank UK PLC
London, 24 June 2022 – Kensington Mortgages (“Kensington”), the fast-growing specialist mortgage lender, has today announced a sale to Barclays Bank UK PLC (“Barclays”). The sale follows an auction process that attracted interest from a broad range of bidders. Barclays is acquiring the business from funds affiliated with Blackstone Tactical Opportunities (“Blackstone”) and Sixth Street, which have jointly owned the business since 2015 during which time Kensington enjoyed an extended period of accelerated growth. The transaction is subject to regulatory approval.
Barclays is acquiring Kensington Mortgage Company Limited (“KMC”), Kensington Mortgage Services Limited (“KMS”) and a portfolio of UK mortgages consisting primarily of mortgages originated by KMC from October 2021 to completion of the acquisition of KMC and KMS (the “KMC Mortgage Portfolio”). The acquisition will allow Barclays to become one of the few major banks with a specialist mortgage offering.
Kensington is a leading UK specialist residential mortgage lender focused on providing mortgages via brokers to borrowers with complex incomes. Using a combination of proprietary technology, data analytics and human insight to design products and make lending decisions, Kensington focuses on the self-employed and those with multiple or variable incomes – segments that major banks often do not serve. The business, which is based in Maidenhead and has around 600 employees, services approximately £8.7 billion of third party and related party mortgages in addition to the KMC Mortgage Portfolio. Kensington originated approximately £1.9 billion* of mortgages in the year ended 31 March 2022.
Under the joint ownership of Blackstone and Sixth Street, Kensington has improved its processes and expanded its product offerings to become a market leader in specialist lending to the self-employed, first-time buyers, older borrowers and customers with multiple sources of income. The business is also recognised in the industry for having a market-leading data and technology platform, which has facilitated profitable growth, product innovation and exceptional loan underwriting performance. The business has grown its originations at a compound annual growth rate of 22% since the acquisition in 2015.
Mark Arnold, CEO of Kensington Mortgages, commented: “This sale marks the start of an exciting new chapter of growth for Kensington. We have a strong track-record in the specialist mortgage space, using our proprietary data and tech platform to innovate and grow, and now is a natural point to bring in a partner who can help us to drive our next expansion phase. As a major UK bank with a broad reach and offering, Barclays is well-placed to support this expansion, whilst the sale will allow it to differentiate itself as a ‘mainstream specialist’ and offer a range of mortgage solutions not available from competitors.”
Matt Hammerstein, CEO of Barclays Bank UK PLC, commented: “The transaction reinforces our commitment to the UK residential mortgage market and presents an exciting opportunity to broaden our product range and capabilities. KMC is a best-in-class specialist mortgage lender with an established track record in the UK market, strong broker and customer relationships and data analytics capabilities. KMC complements our existing UK mortgage business and broker relationships through the addition of a specialist prime mortgage originator and the utilisation of our strong UK funding base. We look forward to KMC management and employees becoming part of the Barclays group.”
Qasim Abbas, Senior Managing Director, Blackstone Tactical Opportunities, said: “Kensington’s success in becoming one of the UK’s leading specialist mortgage lenders is testament to the quality of its products, the resilience of its business model and the excellence of its management team. In particular, their collective strength in harnessing the power of data science and analytics, prudent risk management and always providing their customers with the right product to suit their individual needs has been key to the evolution of their business. We wish them the very best as they enter an exciting new chapter.”
Michael Muscolino, Partner at Sixth Street, said: “We want to thank management and the entire Kensington team for their dedication and collaboration over the past decade in building the platform into a market leader. Our focus on using data to drive consistent innovation allowed us to create new products and broaden mortgage access while maintaining exceptional underwriting standards. We wish the company great continued success with its new partners at Barclays.”
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About Kensington Mortgages
Kensington Mortgages was founded in 1995. The business was acquired by Blackstone and Sixth Street Partners in 2015, initiating a period of considerable growth and investment. The mortgage servicing business Acenden was also acquired by the same investors and merged with Kensington, creating a broader UK mortgage business.
Since the acquisition, Kensington has more than tripled the number of underwriters it employs and almost quadrupled its origination volumes. Kensington lent £1.9bn* in new mortgages for the year ended 31st March 2022.
A clear period of growth was initiated with the arrival of Mark Arnold as CEO in April 2018. Under the guidance of the leadership team, Kensington consolidated a number of disparate legacy brands under a revitalised Kensington identity, launched a best-in-class, data and analytics driven and highly scalable integrated technology platform, sharpened its market positioning and launched a range of new and innovative products. These include mortgages for public sector workers, products that reward borrowers for improving the environmental credentials of their home and a new fixed for term mortgage where monthly payments remain fixed for the entire term of the loan.
The business is now clearly established as a leading specialist mortgage lender, with a strong market position as a lender to the self-employed, younger borrowers, older borrowers and those with more complex personal circumstances. The brand has a 4.4-star consumer rating on Trustpilot.
The business has very strong credit controls. Only 19 loans issued by Kensington Mortgages since 2010 have gone into default, with the total cumulative losses on those loans amounting to just £252,000.
About Barclays Group
Barclays PLC is a British universal bank. It is diversified by business, by different types of customer and client, and geography. Its businesses include consumer banking and payments operations around the world, as well as a top-tier, full service, global corporate and investment bank, all of which are supported by its service company which provides technology, operations and functional services across the Group. For further information about Barclays, please visit its website home.barclays.
Blackstone is the world’s largest alternative asset manager. We seek to create positive economic impact and long-term value for our investors, the companies we invest in, and the communities in which we work. We do this by using extraordinary people and flexible capital to help companies solve problems. Our $915 billion in assets under management include investment vehicles focused on private equity, real estate, public debt and equity, infrastructure, life sciences, growth equity, opportunistic, non-investment grade credit, real assets and secondary funds, all on a global basis. Further information is available at www.blackstone.com. Follow @blackstone on LinkedIn, Twitter, and Instagram.
About Sixth Street
Sixth Street is a global investment firm with over $60 billion in assets under management and committed capital. The firm uses its long-term flexible capital, data-enabled capabilities, and One Team culture to develop themes and offer solutions to companies across all stages of growth. Sixth Street’s London-based presence was formed in 2011 to invest in businesses and assets across Europe. Founded in 2009, Sixth Street has more than 400 team members including over 180 investment professionals around the world. For more information, visit www.sixthstreet.com or follow Sixth Street on LinkedIn.