Investec offer buoys Kensington

The fortunes of Kensington Group improved last week after it revealed that an acquisition offer from Investec could provide the capital needed for it to expand into new mar-kets, including commercial mortgages.

The Investec offer values each Kensington share at 519.5p and its overall value at about 283m.

Kensington admits that intense competition from other lenders means the short-term outlook for the business has deteriorated and 2007’s total revenue is expected to be significantly below 2006’s levels.

But Alison Hutchinson, chief ex-ecutive of Kensington, says the ac-quisition deal will propel the lender forwards, allowing it to achieve greater growth and gain a foothold in the specialist market.

The lender plans to enter new markets including the commercial sector once extra funds are available, despite ditching an expansion strategy in January to focus on core activities.

Hutchinson says: “It’s too early to say if share-holders will back our recommendation to accept Investec’s offer.

“But if the acquisition goes ahead we will retain our brand while gaining the capital needed to ex-pand into a broader range of products.”

She adds: “Kensington is a pioneer in the specialist market but there is potential for us to unlock greater growth and gain broader penetration.”

But the lender admits that redundancies are still likely as it continues its long-running plans to relocate from its Paddington offices to its operation centre in Reading.

Hutchinson says it hopes to re-tain as many staff as possible.