Specialist Lending Market Newsletter - Sector Insight
Through the first five months of 2017 the specialist lending market has built on the post-referendum recovery in confidence that we saw through the second half of 2016.
The four newly-minted challenger banks are now all trading above their pre-Brexit levels, and have reported good 2016 results with strong growth in lending, interest margins and returns on equity. Quoted non-bank specialist lenders have also generally reported good results, with lending growth outstripping the challenger banks, wholesale funding conditions remaining favourable and attractive returns on equity.
Specialist lending M&A volumes have seen an active start to the year with 17 transactions announced across asset, property and personal finance, building on the recovery in activity that we saw in the second half of 2016. Recurrent themes in M&A activity have been the appetite of lenders of scale to acquire specialist origination capability, whether in the form of small lenders or brokers, and the continuing attraction of high-quality assets in the sector for financial investors.
Private equity activity in the UK specialist lending market increased markedly in the first five months of 2017, with over £3bn of new capital deployed into a range of verticals. Motor finance and lifetime mortgages were particularly active. Whilst 2016 was a relatively quiet year for private equity exits in the sector, it appears that it was a good year for portfolio companies whose growth strategies generally met with success.
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