Case studies

Deloitte has advised Vertex Group Limited on the disposal of Vertex Mortgage Services Limited to Capita plc

Another successful transaction in the mortgage servicing sector

Deloitte’s Corporate Finance Advisory team has advised Vertex Group on its £35m disposal of Vertex Mortgage Services Limited (“VMS”) to Capita plc (“Capita”). The transaction is subject to approval by the Financial Conduct Authority.

The transaction

Capita is acquiring VMS for £35m on a cash free, debt free basis (subject to approval by the Financial Conduct Authority).

This acquisition further strengthens Capita’s growing position within the third party mortgage administration market. Building on its commercial mortgage servicing activities, last year Capita added retail mortgage administration to its capabilities following the purchase of Crown Mortgage Services Limited.

The mortgages market is facing significant regulatory and business challenges. With currently only 5% of the mortgage servicing market being outsourced, Capita has identified huge potential for growth in the UK BPO mortgage market, which is estimated to grow to £400m in 2018.

Capita already has a strong working relationship with VMS with VMS being a key supplier to Capita. Extending this partnership provides the opportunity to further invest in VMS’s market-leading software, bringing in additional support and skills to provide the best BPO and software solutions to meet the developing requirements of customers.

Deloitte’s role

Deloitte was appointed as lead sell side advisor on the disposal of Vertex Mortgage Services having last year advised Skipton Building Society on its sale of Homeloan Management, another mortgage administration business, to Computershare. Using our extensive knowledge of the mortgage administration sector, we developed a deep understanding of the business and strategic goals of the company within the context of the wider market in order to provide key market and buyer analysis and recommendations. We advised, project managed and led negotiations through the transaction process, working side by side with management to ensure tight deadlines were met and key information was provided.

Anurag Verma, Corporate Finance Partner, Financial Institutions Group, said: “This transaction marks another landmark deal in the rapidly evolving mortgage administration sector and our team’s 27th successful deal in the wider credit management industry. We expect to see further consolidation take place as well as a number of new market entrants join the competitive landscape. Deloitte is pleased to have had the opportunity to act as exclusive financial advisor to Vertex Group."

About Vertex Mortgage Services

VMS is a differentiated, technology-powered provider of mortgage software and servicing solutions, specialised in providing mortgage processing and administration software solutions to major retailers and high street banks. The business has established a strong market position offering unique and proprietary mortgage origination and servicing capabilities to a blue-chip client base in the UK and Canada. VMS has developed rapidly over the last 24 months, continuing to support existing customers and winning new business in a rapidly changing market, driven by changes to regulation and customer demand.

VMS is being sold by Vertex Group Limited, a leader in business process and customer management services, established in 1996 and now serving over 200 customers worldwide. The transaction includes subsidiary companies Vertex Financial Services Limited and MS Canada Limited, providers of mortgage software in the UK and Canada, and Jessop Fund Managers Limited, providers of unit trust and pension administration services in the UK.

About Capita

Capita plc is the UK's leading provider of customer and business process management (BPM) and integrated professional support service solutions. With 68,000 people at over 400 sites, including 80 business centres across the UK, Europe, India and South Africa, the Group uses its expertise, infrastructure and scale benefits to transform its clients' services, driving down costs and adding value. Capita is quoted on the London Stock Exchange (CPI.L), and is a constituent of the FTSE 100 with 2014 revenue of £4.4bn.

Commenting on the acquisition of Vertex Mortgage Services, Capita plc Chief Executive Andy Parker said:

“As part of our strategy to support the financial services industry, Capita’s ambition is to become the mortgage processing partner of choice for existing mortgage providers and challenger banks. The acquisition of Vertex Mortgage Services is another key step towards achieving this goal. This is a market facing continuous regulatory change and changing customer behaviours, and with Capita’s breadth of services and expertise we are well placed to help organisations with these challenges. This market therefore offers significant growth potential for Capita.”

Did you find this useful?