Freehold says it has re-solved internal issues over the shareholding of its lender, avoiding a rift.
Last month the packagers’ association revealed its ambition to launch Freehold Mortgages, a super-branded lender funded by Investec through Infinity Mortgages, while awaiting the green light from the Financial Services Authority to become a standalone lender.
But issues regarding how shares of the lender will be distributed between investors, those running the operation and Freehold’s members have been subject to negotiation.
It was originally decided that Matt Gilmour and Ravi Takhar, the brains behind Infinity, would take 50% of the shareholding in Freehold Mortgages while Paul Brett and Chris Fleetwood, who head and provide PR for Freehold respectively, would each take a 25% stake.
Following appeals from members of the group, this was changed so Fleetwood and Brett would share 30% between them and the 23 members would share 20%.
But this has now reverted to the original allotment. A legal contract has been written up so that on the sale of the lender, out of Fleetwood and Brett’s combined 50% Freehold members will receive 20% of the business, depending on how much profit they have contributed during its lifetime.
Members will also be included in a profit sharing arrangement. From year two, 25% of the profit will go to the members while Gilmour and Takhar will take 75%. In year one profit will be ploughed back into the business.
Last year the Professional Mortgage Packagers Alliance split over similar member dissatisfaction about the allotment of shares in the lender it set up, Unity Homeloans. Unity was also backed by Investec.
Terry Pritchard, responsible for lender liaison and product development at Freehold, and whose company Chase UK is also a member, says the new contracts simplify the shareholding and protect members. He adds that once the lender gets approval he will seek a review of the share distribution.
Fleetwood, who apparently invested equity in the lender as well as providing its PR services, says: “We want to avoid a Unity-style situation.”