Bluestone Group more likely to pursue trade sale and could break up UK and Australia operations – founder

25 September 2017 - 11:21 am UTC

UK-headquartered specialist mortgage and asset finance business, Bluestone Group, is assessing exit options, founder Alistair Jeffery confirmed to this news service.

An unsourced media report earlier this month claimed the company was preparing a dual-track sales process following inbound interest for the private equity-backed company.

A transaction structure is yet to be decided, and no advisor has been hired, said Jeffery, who is a former investment banker and a 30% shareholder in the company, which was founded in Australia.

Its other main shareholders are Australia’s Macquarie Group, with 14.5% and UK-based private equity firm Lloyds Development Capital (LDC), with 53%.

A trade sale is a more likely option than a listing, and could involve separate sales of the UK and Australian operations, said Jeffery. He added that he is not planning to exit, but intends to maintain his involvement in Bluestone Group’s operations globally. This would be through a retained investment in the Australian and APAC operations, the UK and European businesses separately, or a combination of these two.

The Australian business is the most mature of the group and buyer interest is therefore more likely to be for this part, he said, adding that the European operations, while growing strongly, are relatively less mature.

The company could attract attention from another private equity firm, Jeffery said, adding that PE and credit funds have shown a lot of interest in the non-bank market both in Australia and the UK.

Other potential investors could be strategics within the financial services arena looking to broaden their operations or find vertical integration, Jeffery said. Demand for its products and services has been growing strongly in the past year or two, so prospective investors could use its platform to deploy capital and capture attractive margins available in the specialist space, he said.

Jeffery declined to comment further or give a valuation, but in 2015 director and General Manager Australasia Campbell Smyth told this news service the company had FY June 2015 net profit of AUD 10m (EUR 6.7m). Media reports have suggested a valuation of some AUD 120m.

Smyth said the group would start actively assessing an equity transaction in 2017, in line with its growth strategy, which includes pursuing a liquidity event every five years, and that this would be in alignment with its private equity shareholder’s timeline. LDC declined to comment while Macquarie Group did not respond to requests for comment.

Bluestone Group began in Sydney in 2000 as a mortgage origination and securitization platform and has grown to become a multinational capital and asset management business with offices in Australia, the UK, Ireland and the Philippines. According to its website it has originated more than AUD 5bn worth of loans for some 22,000 customers and completed 20 securitizations.

By Louise Weihart in Sydney