JC Flowers swoops on Kent Reliance
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Former FSA chairman Sir Callum McCarthy is to chair a new organisation to emerge out of a £50m investment in Kent Reliance by private equity firm JC Flowers.
US private equity firm JC Flowers reportedly held talks last weekend to invest £50m into building society Kent Reliance.
The Sunday Times says that in return for its investment JC Flowers will receive a 49 per cent stake in a new holding company.
Former chairman of the FSA Sir Callum McCarthy is to become chairman of the as yet unnamed organisation, which is expected to become a launchpad for up to 10 similar deals for JC Flowers to consolidate struggling building societies.
Under the terms of the deal, Kent Reliance will remain a mutual with its members owning a majority stake in the company and JC Flowers owning the rest.
Kent Reliance chief executive Mike Lazenby will become chief executive of the new group and will be responsible for leading further consolidation.
JC Flowers attempted to buy Northern Rock in 2007 prior to its nationalisation, and is said to be willing to plough up to £500m into the venture.
It is thought to be the first time a private equity firm has been allowed to invest in a mutual, and details of the deal are expected within days.
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Readers' comments (5)
Anonymous | 12 Jul 2010 9:43 am
A new slogan for the building society movement - 'All the profits we make are reinvested for the benefit of our members - and US private equity firms.'. Doesn't have quite the same ring to it, does it...
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Dathan Steele | 12 Jul 2010 9:51 am
Hmmm, private equity and mutuals..... sounds like a really good fit! :(
Here we go again.....
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John Harding | 12 Jul 2010 12:39 pm
Mutuals are by their very nature self help groups, in the case of Building Societies lots of small savers putting their money away and helping themselves and other like minded people to purchase their own home.
Taking a private equity 'partner' who's interest can only be to receive interest or a dividend and eventual 'capital' appreciation fundamentally brakes with this model.
Somehow this seems to break with the whole BS/Mutual concept and reduces the current ownership by investor/savers.
I think this is therefore wrong.
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H.Lyon | 18 Jul 2010 10:51 pm
I agree totally with the previous comments. Also there is little or no info about the purpose of this proposed deal.
Why should members believe that it is being done in their interests?
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R Wall | 22 Oct 2010 5:06 pm
Received my information & voting pack today. The private equity firm has initially got 40.1% of the shares but will also own 'a number' of convertible preference shares and 'may be issued with further shares in the future'. Seems to me that the only people to loose out are the members. Why not just convert to a bank as previous society's with members receiving shares?
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