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Mortgages plc taken over in £40m deal

Sub-prime lender Mortgages plc has sold 87.5 per cent of its shares to Euro-pean finance company Nikko Principal Invest-ments for £40m in a bid to build its position in the market.

It says it has had negotiations with a number of financial institutions in the UK and the US over the past months about raising capital through investment or selling the company outright.

Mortgages plc says it decided to accept the offer from Nikko, which established a new holding company to handle the deal called Majestic Acquisitions, as it lets the existing management, who now owns 12.5 per cent of the company, to retain control of the running of the firm.

Trevor Pothecary remains as chief executive and Paul Thomas as chief operating officer and two non-executive directors will join the board from Nikko. A sales and marketing director is being appointed this month following the departure of Paul Howard who has left to join Sun Bank.

It says now that it is no longer independent it will have the resources to compete with other sub-prime lenders such as GMAC RFC.

Launched in 1998, Mortgages plc has completed almost £1bn worth of mortgage loans and intends to use the additional capital to diversify from sub-prime into areas such as buy-to-let and self-certification.

It says it will also invest in technology and systems to improve the service offered to intermediaries.

Pothecary says: “The deal has let us remain autonomous and leaves management in control rather than become the subsidiary of another financial services company.

It also puts us on the same playing field as competitors such as Kensington and GMAC RFC.”


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