Fortress Investment Group plans to sell a UK real estate finance specialist, reinvented after the Great Recession, to Athene Holding Ltd.
Neither company announced the terms and conditions for the sale of Foundation Home Loans, the trademark of Paratus AMC Ltd. FHL is a successor to GMAC-RFC, which was a top 10 company in both the UK and the US before the crisis. Apollo Global Management will oversee Athene's investment in FHL once the transaction receives the required regulatory approvals.
The proposed acquisition, which comes just days after US digital lender Better.com announced it would buy London-based online mortgage broker Trussle Lab, underscores the appeal of the UK mortgage market. The loan volume there was supported by a temporary tax break for property purchases.
Upon completion of the acquisition, Apollo Global Management will "help scale FHL's platform and continue to position it as the leading originator in the UK rental-purchase market," said Kevin Crowe, partner at AGM, in a press release. Apollo will manage the investment for Athene, a retirement planning company.
The loans will be added to Athene's residential mortgage and structured securities portfolio, which as of March 31 had net assets of more than $ 13 billion. Loans and owner-occupied mortgages from June.
Funds managed by Fortress affiliates originally acquired the UK arm of GMAC-RFC (an acronym for General Mortgage Acceptance Corp.-Residential Funding Corp.) in 2010 after the company was challenged after the crisis. Subsequent to that period, it processed liquidations and significantly reduced arrears on an existing portfolio of UK mortgages valued at £ 4 billion ($ 5.5 billion).
The British company returned to profitability in 2011 and restarted as FHL in 2015. In June, it serviced £ 930 million ($ 1 billion) in loans. FHL has also issued £ 3 billion (US $ 4 billion) in mortgage-backed securities, including securitizations of legacy portfolios acquired by third parties. Under Fortress ownership, the staff doubled from FHL to 300.
"Fortress has repeatedly reaffirmed its commitment to our business … to invest in the growth of our company, despite the uncertainty created by the Brexit referendum and the COVID-19 pandemic," said Hans Geberbauer, CEO of the Home Loans Foundation, in a press release. "You have created a great foundation for the company to thrive among its new potential shareholder."