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Specialist sector sees £3bn of M&A activity in just five months

The specialist lending market in the UK has been bolstered with over £3bn of mergers and acquisitions activity in the first five months of 2017, according to research from debt advisory firm Livingstone.

Some 19 transactions were took place across asset, property and personal finance during the first five months of 2017.

The international mid-market M&A and firm shows that the specialist lending market continued its post-referendum recovery between January and May this year with a continuation of the confidence seen in in the second half of 2016.

Livingstone’s research into the specialist lending market revealed that the 15 publicly-quoted lenders surveyed reported an average growth in loan books of 24% year-on-year, with average returns on equity remaining attractive at 19% (post-tax).

The report also found that private equity activity in the UK specialist lending market increased markedly in the first five months of 2017, with over £3bn of new capital deployed into a range of verticals, with motor finance (£1bn) and life time mortgages (£0.3bn) particularly active.

Financial investors, particularly private equity, accounted for nine out of 19 deals in the period, reinforcing the strong investor confidence in the UK seen in public equity and funding markets.

Alex John, partner at Livingstone, said: “The specialist lending market had a very positive start in 2017, with businesses signalling a continuation of favourable economic conditions, good credit quality and growth strategies generally meeting with success.

“The growth in specialist lenders, and increased funding into this space, is also driving the availability of credit for UK SME’s.

“There has been strong appetite to acquire specialist capabilities and high-quality assets so far this year in the form of small lenders or brokers, and the high-quality assets in the sector remain attractive for investors.

“Post-Brexit we have seen that articulating a credible strategy for organic growth independent of market conditions is of particular importance for successful M&A deals in an environment of greater political and economic uncertainty, and we expect this to continue through 2017.”

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