A report has suggested that HBOS, the UK bank that last week reported that pre-tax profits halved in the first half of the financial year, wants to reorganise its integrated finance operation. This could result in the sale of some of the unit's major investments, such as social housing maintenance provider Keepmoat.
Bank of Scotland Integrated Finance has been one of the most active mid market financial acquirers over the last few years, acquiring Keepmoat and crane hire business Ainscough last year amongst others. A report has suggested that the bank now wants to bring in third party investors to support these investments rather than provide both the debt and equity for their buyouts.
At the beginning of July Mark Hammond, head of the unit, told ThomsonReuters publication IFR Buyouts Europe: “The market is different from a year ago and that has had an effect on all players in the market.” He was reacting to speculation that his division had slowed its rate of investment this year.
A legal source said: “The model of integrated finance does not suit buyout teams as well in the current environment. BoSIF did lots of deals last year but we have not seen them appear as often on transactions this year.”
The largest was this April's Gbp143m development capital investment in Integrated Subsea Services, a company already backed by Bank of Scotland. BoSIF's biggest buyout was the Gbp12m purchase of healthcare business Verna Group from LGV Capital in February.
Hammond said the bank had no particular policy to turn away from larger deals. “This is just a reflection of the market as a whole: there are very few vendors of bigger businesses at the moment.”
Source: Thomson Merger News