Home & Capital future questioned

Grainger Equity Release has a recommended offer for Sovereign Reversions on the table, and following a final court proceeding due to take place tomorrow (Friday 6th August), the acquisition looks set to be finalised by the 9th August.

Doubt has been cast over Home & Capital’s future because its home reversions provider business replicates Bridgewater Equity Release, the provider already owned by Grainger.

A spokesman from Grainger said: “At the moment it’s business as usual for all Sovereign and Home & Capital employees and following the finalisation of the acquisition, which we hope will be on the 9th August, there will be a review of the whole business.

“Both the Sovereign Reversions and Grainger Equity Release management teams will be involved in this review over several months which will look at delivering the best outcome for shareholders, stakeholders and customers.”

Graeme Marshall, Sovereign Reversions chief executive, said there had been no decisions made about the future of Home & Capital, but added: “We look forward to having some constructive discussion with Grainger when the deal is done. I would hope they’ll recognise the value of Home & Capital brand name and everything we’ve built up last 30 years.”

Dean Mirfin, group director at equity release advisers Key Retirement Solutions said there was a clear replication of resource between Home & Capital and Bridgewater, which he expected would be the main subject of review.

He added: “The difference between the two businesses though is that H&C is an advisor as well as a provider and Bridgewater is solely a provider.

"I would guess the future of H&C will depend on how busy those advisers are – is there a synergy by dovetailing the two businesses?

“The most obvious value is the potential Home & Capital and its brand has as an adviser. Its measure will be how effective and strong that brand is direct to consumer, and whether it’s delivering value to the business.”

Marshall confirmed that the Grainger bid for Sovereign Reversions is £34 million, which he said was “incredibly cheap”.

There is some speculation that Grainger, which does not currently have any advisory business, is buying Sovereign solely for the back book of reversions.

This book of property has dropped in value since 2007 as a result of falling house prices, but Marshall said there is unrealised value in the book as much of the property will not revert for many years.