Big Lenders Take Stake in London Brokerages
Under the terms of a debt refinancing deal, Bank of America (BAC) Merrill Lynch (BofA) and Japanese bank Mizuho will now jointly own a majority stake in the private equity firm that owns London-based mortgage brokerage Alexander Hall and real estate brokerage Foxtons, a source at Merrill Lynch confirmed to HousingWire. In 2007, Mizuho financed £260m (US $416.2m) of the £360m leveraged buyout of Alexander Hall, the mortgage brokerage, and Foxtons, its sister real estate brokerage. Private equity firm BC Partners acquired the two companies using funding from Mizuho and BofA. The restructuring arrangement cuts Foxtons’ debt from about £300m to £120m. Both banks will reportedly appoint representatives to sit on the company’s board, creating an atypical arrangement for a lender to assume control of the company to satisfy debt. “The governance of the company is based on the requirement for consensual decisions between the leading shareholders,” Andrew Newington, managing partner in the London office of BC Partners, told the Financial Times. "With the market stabilizing and with Foxtons' potential to take market share…this was a compelling investment.” BofA confirmed to HousingWire the accuracy of the FT report. Foxtons is known throughout London for its company-branded Mini Coopers real estate agent use to drive prospective buyers to properties on the market (pictured above). The company was a crucial piece of the mid-decade property bubble in London, marked by its aggressive selling strategies and exorbitant commissions, but has struggled during the recession. In a statement, Foxtons confirmed that subject to regulatory approval, it has agreed a consensual capital reorganization with its existing banks and shareholders. “Despite the credit crunch and recession, the strength of Foxtons brand and business model, and the quality of our people, mean we have continued trading profitably,” Foxtons CEO Michael Brown said in a statement. “Our strengths and future potential lie behind the capital reorganization." Write to Austin Kilgore. The author held no relevant investments.