Home Capital approached by Catalyst Capital: Reuters

Canadian private equity fund Catalyst Capital Group recently proposed a strategic partnership with Home Capital Group Inc that would see it injecting new capital into the lender, the Toronto-based Globe & Mail newspaper reported on Friday.

Citing sources familiar with the proposal, the Globe & Mail reported that Catalyst, an asset manager that focuses on distressed companies, had also put forward a proposed new management team for Home Capital with banking experience.

Home Capital, Canada’s biggest alternative mortgage lender, is currently recruiting a new chief executive and chief financial officer.

The report said Catalyst is understood to have lined up support for the proposal from a group of institutional investors.

Depositors have withdrawn 95 percent of funds from Home Capital’s high interest savings accounts since March 27, when the company terminated the employment of former Chief Executive Martin Reid.

The withdrawals accelerated after April 19, when the Ontario Securities Commission, Canada’s biggest securities regulator, accused Home Capital of making misleading statements to investors about its mortgage underwriting business.

The company has said the accusations are without merit. Its funding has stabilized.

Home Capital declined to comment. Catalyst Capital did not respond to requests for comment.

Update: The Globe & Mail earlier reported that Home Capital received takeover approaches led by Onex Corp and Brookfield Asset Management but is moving ahead with plans to stay independent.

(Reporting by Matt Scuffham)

(This story has been edited by Kirk Falconer, editor of PE Hub Canada)

Photo courtesy of Reuters/Chris Helgren