Primis Parent Company Launches Broker Consolidator Joint Venture With Private Equity Firm
LSL has entered into a £ 200million joint venture with private investor Pollen Street Capital (PSC) to establish mortgage brokerage firm Pivotal Growth.
The residential property services provider, which is also the parent company of the Primis mortgage network, has pledged £ 33.5million to support the mortgage advisory firm acquisitions to be made by Pivotal Growth, while PSC has pledged £ 62.4million.
The investment by both parties will be complemented by external debt financing in Pivotal Growth to finance the purchases.
All acquired businesses are expected to become members of the Primis Mortgage Network.
According to LSL, the group identified a “significant buy and build opportunity” in the mortgage intermediary and protection market as part of a strategic review last year.
He added, “The LSL Board of Directors concluded that this opportunity would be best exploited by working with a joint venture partner to provide additional capital and expertise in financial services as well as experience in running the business. a similar strategy in related markets.
“The mortgage market is very diverse, rapidly growing, resilient and dominated by intermediaries. In a fragmented market, LSL has identified a potential pipeline of more than 50 large companies that could grow further with the advantages offered by Pivotal and the initial strategy will focus on these large companies, thereafter targeting smaller companies. “
Pivotal Growth will use technology provided by Mortgage Gym, which the group acquired in February.
The new brokerage will also use technology provided for the protection market by Direct Life & Pensions, in which the group acquired a 60% stake in February.
LSL Chairman Simon Embley has been appointed CEO of Pivotal Growth.
LSL’s board of directors has agreed that Emley invest up to £ 4million alongside PSC and LSL for a 4.4% stake in the company, which the group said “would align its interests on those of LSL shareholders and as a demonstration of its firm belief in the potential of Pivotal Growth ”.
Embley will step down as non-executive chairman of LSL’s board following the release of the group’s preliminary 2020 results on April 28, but will remain on the board as a non-executive director.
David Stewart, CEO of LSL, and Ian Gascoigne, Partner at PSC, will be the directors of Pivotal Growth.
Stewart said: “The creation of the Pivotal Growth joint venture with Pollen Street Capital will allow us to establish a leading position in providing direct advice to consumers and strengthen the preeminent position of our Primis network. “
Gascoigne added: “Although large and long established, the UK mortgage brokerage market remains very fragmented, offering significant potential for synergistic consolidation.
“We believe that Pivotal Growth has the potential to quickly become a market leader, while delivering pioneering levels of innovation and the highest customer service standards in the industry. “
Jane Cross, previously Chief Risk Officer of the group’s Primis Network and Managing Director of its e.surv surveying activity, has been appointed Chief Operating Officer.