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Paragon Banking Buys Titlestone Property And Oaktree Loan Portfolio

LONDON (Alliance News) - Specialist finance provider Paragon Banking Group PLC said Tuesday it ...

Alliance News 3 July, 2018 | 8:13AM
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LONDON (Alliance News) - Specialist finance provider Paragon Banking Group PLC said Tuesday it has acquired the entire share capital of Titlestone Property Finance Ltd for GBP48 million and is also acquiring a loan portfolio for GBP226 million.

Both Titlestone and the loan portfolio are owned by funds that are controlled by the Oaktree Capital Management LP, a global investment manager.

The portfolio consists of development finance loans and will be acquired from a series of Oaktree's special purpose vehicles. Its average yield is roughly 11% and Paragon will fund the purchase through retail deposits.

Oaktree is selling a further portfolio of loans, which will be serviced by Paragon, to CarVal Investors.

Titlestone provides residential development financing to property developers. It has committed GBP2.2 billion to developments and in the 12 months to June it advanced GBP274 million to its clients. Its pipeline is close to GBP250 million.

The company said its GBP48 million purchase price is a GBP47.8 million premium to Titlestone's net assets and is expected to widen Paragon's net interest margin. The acquisition is expected to positively impact the banking group's cost to income ratio and boost its post tax profit by a "high single digit percentage".

Following the transaction, Paragon will suspend the remainder of its share buyback programme.

"The UK development finance market represents an excellent long-term opportunity and Titlestone will enable us to accelerate our growth in this area," said Paragon Chief Executive Nigel Terrington.

Shares in Paragon were up 0.5% at 472.80 pence on Tuesday.

By Anna Farley; annafarley@alliancenews.com

Copyright 2018 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Paragon Banking Group PLC 496.20 GBX -0.86 -

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