LSL has agreed a joint venture with Pollen Street Capital (PSC) to establish Pivotal Growth, a vehicle seeking to become a leading national mortgage broker.
It is planned that at least £200m will be made available by way of equity and debt to fund acquisitions. LSL has committed up to £33.5m and PSC up to £62.4m to support the acquisitions to be made by Pivotal Growth. The investment by LSL and PSC will be supplemented with external debt finance in Pivotal Growth to fund purchases, with a view to an exit event over a three-to-six year period.
LSL’s chairman, Simon Embley, has been appointed chief executive of Pivotal Growth and will step down from his role as non-executive chair of the LSL board on 28 April 2021. At the same time, Bill Shannon, currently deputy chair and senior independent director, will become chair of the LSL board and chair of the nominations committee.
David Stewart, LSL’s chief executive officer, and Ian Gascoigne, partner at PSC, will be directors of Pivotal Growth.
The Toolbox system is used to manage the operations of all PRIMIS members and will be the operating and technology platform for the Pivotal Growth ‘buy and build’. Pivotal Growth will also use the technology of the recently acquired Mortgage Gym and Direct Life & Pensions businesses which offer solutions for the mortgage and protection markets respectively.
Pivotal Growth has entered a long-term arrangement with PRIMIS, with all acquired businesses anticipated to become PRIMIS members, leveraging further PRIMIS’s scale and existing leading positions in the mortgage and protection markets.
Stewart 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.”
Gascoigne added: “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.”