Pollen Street Capital and LSL announce £200m “Pivotal Growth” joint venture to develop a leading national mortgage broker
Pivotal Growth Limited aims to build a leading, UK wide mortgage broker
Pollen Street Capital and LSL are pleased to announce the formation of a joint venture to establish Pivotal Growth Limited (“Pivotal Growth”), with the aim of building a leading, UK wide mortgage broker powered by market leading technology, first class regulatory compliance and exemplary customer service.
LSL is an established player in the UK property market with a current market capitalisation of approx. £350m. In PRIMIS, LSL operates one of the largest financial services network and advisory businesses in the UK with around 2,600 advisors, accounting for £32.6bn of mortgage completions in 2020, representing approximately 9% of the total purchase and remortgage market.
Simon Embley, LSL’s current Non-Executive Chair, will be appointed Chief Executive of Pivotal Growth and subsequently step down from his role as LSL Chair. Simon has a track record of launching and building businesses of a significant scale and considerable experience in the UK mortgage broking market. Simon previously led the growth of LSL through a successful private equity backed buy-and-build strategy before the listing of the business in 2006.
While large and long-established, the UK mortgage broking market remains highly fragmented. Increasing regulation, retiring brokers and the need for technology investment, provide attractive tailwinds supporting the rationale for synergistic consolidation. Pivotal Growth will be one of the few active consolidators operating in the market and will benefit from revenue and cost synergies, organic growth, and multiple arbitrage. We see attractive structural parallels between the mortgage broking market and other segments where private equity backed consolidation strategies have been successful. We believe that the combination of LSL’s experience and expertise in the financial and property services markets and Pollen Street’s extensive capabilities in investment and business transformation form the basis for a highly successful partnership. Pivotal Growth follows our extensive recent experience of backing consolidation strategies including Kingswood in wealth management, FCD in forex and the recent successful exit of Specialist Risk Group in commercial insurance broking.
David Stewart, Group Chief Executive of LSL, said:
“The launch of Pivotal Growth marks a significant milestone in the implementation of the Group’s strategy. It follows other significant recent announcements, including the steps we have taken to strengthen our management team and recent acquisitions of Mortgage Gym and Direct Life & Pension Services.
LSL is a market leader in the mortgage network market and the provision of financial services to estate agencies. The establishment of the Pivotal Growth joint venture with Pollen Street Capital will enable us to establish a leading position in the provision of direct-to-consumer advice and underpins the pre-eminent position of our PRIMIS network.
I look forward to describing our plans further when we release our Preliminary Results on 28 April.”
Ian Gascoigne, Partner at Pollen Street Capital, said:
“We are highly enthusiastic to support Simon Embley and his team in the launch of Pivotal Growth. Pollen Street has an extensive track record of backing successful buy-and-build platforms in UK financial services, most recently with Specialist Risk Group in commercial insurance broking, Kingswood in wealth management, and with foreign exchange platform Foreign Currencies Direct.
We believe that LSL’s unrivalled experience and expertise in the financial and property services markets and Pollen Street’s extensive capabilities in investment and business transformation, form the basis for a highly successful partnership. While large and long established, the UK mortgage
broking market remains highly fragmented, offering significant potential for synergistic consolidation. We believe that Pivotal Growth has potential to quickly become a market leader, while delivering pioneering levels of innovation and the highest standards of customer service in the industry.”
Pollen Street alongside LSL, have identified a pipeline of over 50 larger firms. The initial strategy will focus on these larger businesses, thereafter, targeting synergistic bolt-on acquisitions. Each acquisition will be reviewed on a deal-by-deal basis with Pollen Street having a consent rights over all acquisitions, and other material decision making within the JV.
We believe that the combination of LSL’s experience and expertise in the financial and property services markets and Pollen Street’s extensive capabilities in investment and business transformation form the basis for a highly successful partnership.
Read more in the associated press release (circulated to the market earlier today)