Paragon buys specialist lender for £117m

Paragon buys specialist lender for £117m

The Paragon Group of Companies has acquired Surrey-based specialist lender Five Arrows Leasing Group Limited for £117m.

Five Arrows Leasing, currently owned by Five Arrows Leasing Holdings Limited which is part of Rothschild and Co, is a group of companies that each offer “specialist asset finance services in distinct sectors”.

It offers a range of asset finance products, through its subsidiary brands, to UK small and medium-sized enterprises, including equipment, vehicle and construction equipment finance and is also a provider of lease servicing.

At its last audited balance sheet (31 March 2015), Five Arrows Leasing had assets of £245.1m financed by £42.9m of shareholders’ funds and a £178m loan from Rothschild and Co.

In the year to 31 March 2015, Five Arrows Leasing made a pre-tax profit of £10.2m and profits after tax of £8.1m.

This transaction is expected to complete by 3 November 2015, when the equity consideration will be paid by Paragon Bank and the inter-company debt refinanced via Paragon Bank’s retail deposits. Five Arrows Leasing’s loan book currently stands at around £240m financed by a £193m loan from Rothschild and Co.

Nigel Terrington, Paragon’s chief executive, said: “The acquisition provides the opportunity to continue pursuing our strategy of diversifying the group’s income streams, building strong and sustainable earnings growth and enhancing our return on equity.

“The Five Arrows Leasing culture, philosophy and operating model is an excellent fit with the group and we look forward to working with their management team and to supporting growth opportunities across the SME markets.”

Paragon’s results for the year to 30 September 2015 will be announced on 24 November 2015.