Kensington will acquire the loans originated by MPL. The new lender will target intermediaries who do not currently recommend Kensington products. Around 75 per cent of the mortgages will be first-charge products, while second-charge mortgages will have a LTV of below 75 per cent.
Kensington has made an initial investment of £1 million to acquire a minority stake in the business and will also provide up to £2 million in start-up costs. It has the option to acquire the remainder of the equity over the next four years.
John Maltby, chief executive of Kensington Group, said: “We’re confident of the state of the marketplace so saw this venture as a good opportunity. We are hoping MPL will become one of the major players in the non-conforming market.”
But Matt Grayson, head of PR at BM Solutions, said: “This is obviously a move by Kensington to try and secure more distribution through another brand. But why not just do this through Kensington? It is interesting to note that it is focusing quite heavily on second-charge loans, an area which won’t be regulated by the FSA.”
The MPL management team will include Kensington’s finance director Simon Kingdon, who will be moving to MPL as finance director. David Johnson, ex-igroup managing director, will be executive chairman while Colin Sanders, outgoing CEO of igroup is rumoured to be joining the new lender as chief executive following the completion of his notice period. Philip George, ex-managing director of First National, will be a non-executive director.
George said: “We want to provide a level of service that maybe brokers aren’t currently receiving from other non-conforming lenders.”
Due to start-up costs it is expected the venture will dilute Kensington’s earnings per share in 2004 by down to 2p.
