Delancey has sold Milton Homes, a provider of equity release products for residential property, to City of London Group for £20.2m.
The purchase price will be satisfied through £7m in cash and the issue of £13.2m in shares.
AIM-listed City of London Group proposes to raise £11m through an equity fundraising which will be used as part of the consideration for acquisition.
City of London Group plans to grow the Milton Homes portfolio, which currently has 586 properties worth £77m, for equity release. It will invest around £15m in the first year and a total of £100m over a five-year period.
The Milton Homes business was founded in 2004 and acquired its first portfolio of UK residential properties in the same year. In 2007, Milton Homes acquired Retirement Plus, another home reversion plan provider and administrator, which consolidated Milton Homes’ position in the equity release market.
Paul Milner, chairman of City of London Group, said: “The board believes that the acquisition of Milton Homes presents the company and its shareholders with an attractive opportunity to acquire a business in the equity release sector. Milton Homes will enable the group to develop a broad based financing business and moreover the additional balance sheet strength will give access to a wider range of funding lines.”
Colin Wagman, deputy chairman of Delancey and chairman of Milton Homes, added: “Milton Homes now has the opportunity to advance its business prospects with access to a wider pool of capital and to provide it with more profile to enable it to expand its equity release products. Following the transaction, the existing shareholders will retain a substantial involvement in the future of the business. We are delighted that DV4 will continue as the majority shareholder.”