Kensington securitises to fund future growth

Kensington securitises to fund future growth

Specialist lender Kensington is back into the cycle of securitisation as part of a strategy for growth, according to its chief executive.

The firm closed its first securitisation in three years at the end of March, raising £497m to help position it for further expansion.

Ian Henderson, chief executive, told FTAdviser that since Investec sold Kensington to private equity buyers Blackstone and TPG Capital last September, it lost access to funding from their balance sheet.

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“The sale meant freedom from some of the constraints that were placed on us, but it also means we’re back into the cycle of securitisations to support further growth.”

Strong demand enabled Kensington to increase the size of the securitisation issue, which was oversubscribed and included £370m of AAA-rated bonds priced at 1.15 per cent over Libor.

The new round of funding will enable the firm to target opportunities in the residential and buy-to-let market, according to Mr Henderson.

“We’re definitely looking to focus on our buy-to-let presence, I think the specialist sector will continue to grow,” he stated.

“Regulation and affordability assessments mean that more people are going through brokers rather than the High Street. There is a real need for case by case manual underwriting which is why Kensington will be investing in providing support to brokers to help them identify and place specialist cases.”

Mr Henderson added that the firm now has the staff and systems in place to deal with capacity increases expected in the next few years.

Last week Kensington cut rates by up to 0.6 per cent across its buy-to-let and residential range as part of the growth push.

Steve Griffiths, head of sales and distribution, commented: “Feedback from brokers shows there is growing demand for competitive rates and increased choice for landlords as well as for self-employed applicants and people who work on contracts or who have incomes which are too complex for the High Street to handle.”

Martin Reynolds, chief executive of SimplyBiz Mortgages, agreed that their members are seeing demand from consumers who do not fit the High Street norm.

David Hollingworth, associate director of communications at London and Country Mortgages, added that while the market is offering competitive rates at the moment, many borrowers can still find it hard to tick all the boxes for some major lenders.