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London-based private equity firms Patron Capital and Electra Partners have agreed to pay £325 mln (€440 mln) to acquire Grainger Retirement Solutions, the home reversion equity release business of UK property Group Grainger.

Completion of the transaction, in which each of Patron and Electra will invest £45 mln, is subject to regulatory approval.

Retirement Solutions is an originator, consolidator and servicer of home reversion equity release plans. The Grainger Retirement Solutions business has around 20 staff and its portfolio comprises over 3,500 properties. Patron Capital and Electra Partners said they will be equally represented on the Retirement Solutions board, while Patron Capital will be the operating partner.

Equity release
The explains that equity release 'refers to a range of products that let you access the equity (cash) tied up in your home if you are over the age of 55. You can take the money you release as a lump sum or, in several smaller amounts or as a combination of both.'

Equity release can take the form of a lifetime mortgage or home revision. Under the second option a person can sell all or part of a home to a home reversion provider in return for a lump sum or regular payments. The person can continue living in the property until death, rent free, but is responsible for maintenance and insurance. At the end of the plan the property is sold and the proceeds shared according to the proportions of ownership.

Comment
'As property companies increasingly look to focus on pure development activity, we are taking advantage of the significant opportunity to acquire finance-related businesses and portfolios,' said Keith Breslauer, managing director of Patron Capital. 'This deal, which follows our acquisitions of shared equity mortgage portfolios from Galliford Try and Keepmoat earlier this year, provides us with a strong business that has an extensive portfolio and attractive exposure to the UK residential property market, particularly given the ageing population.'

EY Real Estate Corporate Finance advised on the transaction.

Patron represents €3 bn of capital across several funds and related co-investments, investing in property, corporate operating entities whose value is primarily supported by property assets and distressed debt and credit related businesses. Investors represent a variety of sovereign wealth funds, prominent universities, major institutions, private foundations, and high net worth individuals located throughout North America, Europe, Asia and the Middle East.