Kensington Group is looking to more than double distribution following its sale to South African investment bank Investec for £270m last week.
Chief executive Alison Hutchinson says the sub-prime lender aims to increase the number of brokers it deals with to 20,000 from the current total of 5,000 to 6,000.
She says: “Kensington is still a strong player in the market but this opportunity will let us grow even more. Investec was looking to expand further in the UK. It needed a strong brand and reputation and what we needed is the capital to let us grow.”
It is understood that several major shareholders, including former chairman Martin Feingold who owns just under 12 per cent of Kensington, have criticised the sales price.
The £270m price tag is less than half what Kensington was valued at a year ago, which reflects problems it has experienced including several profit warnings.
In a trading update last week, it said it expects total revenues for this year to be significantly below 2006.
The lender says it will implement a cost reduction programme aiming for annualised savings of around £8m to be delivered after two years. This will involve redundancies although Hutchinson will not comment on how many of its 300 staff will be affected.
Mortgageforce managing director Rob Clifford says it is great news that a business wants to invest in and grow Kensington.
He says: “We are talking about a company that pioneered the sub-prime market. It was the original innovator. It would have been a great shame if it had got subordinated as a brand.”
Savills Private Finance director Melanie Bien says Investec’s purchase of Kensington is a surprise. She says: “It did come out of left field but there is clearly a lot of money in the sub-prime market. Investec is an established brand and it will invest lots and make Kensington do what it does best.”