Fortress to sell U.K. mortgage company with crisis-era roots to Athene

Fortress Investment Group plans to sell a U.K. housing-finance specialist that reinvented itself following the Great Recession to Athene Holding Ltd.

Neither company disclosed the terms for the sale of Foundation Home Loans, the trading brand of Paratus AMC Ltd. FHL is a successor to GMAC-RFC, which was a top 10 company in both the U.K. and the U.S. pre-crisis. Apollo Global Management will oversee Athene’s investment in FHL if the transaction receives required regulatory approvals.

The proposed acquisition, which comes just days after U.S. digital lender Better.com announced plans to buy London-based online mortgage broker Trussle Lab, highlights the draw of the U.K.’s mortgage market growth. Loan volume there has been bolstered by a temporary tax break for property purchases.

Subsequent to the closing of the acquisition, Apollo Global Management will “help scale FHL’s platform, further positioning it as a leading originator within the U.K. buy-to-let market,” said Kevin Crowe, partner at AGM, in a press release. Apollo will manage the investment for Athene, a retirement services company.

The loans will be added to Athene’s residential portfolio of mortgages and structured securities, which totaled more than $13 billion in net invested assets as of March 31. FHL had a GBP3 billion ($4 billion+) portfolio of buy-to-let (investor) loans and owner-occupied mortgages as of June.

Funds managed by affiliates of Fortress originally acquired the U.K. arm of GMAC-RFC (an acronym for General Mortgage Acceptance Corp.-Residential Funding Corp.) in 2010 subsequent to challenges the company faced in the aftermath of the crisis. Following that period, it handled workouts and substantially reduced payments in arrears on a GBP4 billion ($5.5 billion) legacy portfolio of U.K. mortgages.

The U.K. company returned to profitability by 2011 and relaunched as FHL in 2015. It serviced GBP930 million ($1 billion+) of loans as of June. FHL also has issued GBP3 billion ($4 billion+) in residential mortgage-backed securities, including securitizations of legacy portfolios acquired from third parties. Under Fortress’ ownership, FHL’s staff doubled to 300.

“Fortress continually reaffirmed its commitment to our business… investing in our company’s growth right through the uncertainty created by the Brexit referendum and the COVID-19 pandemic,” said Hans Geberbauer, CEO of Foundation Home Loans, in a press release. “They have created a great foundation for the company to thrive under its new prospective shareholder.”

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