Solihull’s Paragon completes £117m acquisition

SOLIHULL-based financial services group Paragon has completed the £117m acquisition of Five Arrows Leasing Group.

The deal, announced last month, was implemented to help the group’s subsidiary, Paragon Bank, diversify its offering to SMEs.

Five Arrows Leasing, acquired from Rothschild & Co, was formed in 1988 and had been owned by Rothschild & Co since 1996. It supplies a range of asset finance products, through its subsidiary brands, to UK SMEs, including equipment, vehicle and construction equipment finance. 

At the end of March, Five Arrows Leasing had assets of £245.1m, financed by £42.9m of shareholders’ funds and a £178m loan from Rothschild & Co.

In the year to 31 March 2015, Five Arrows Leasing made a pre-tax profit of £10.2m. 
The transaction completed when the equity consideration was paid by Paragon Bank and the inter-company debt refinanced via Paragon Bank’s retail deposits.

The acquisition is expected to be earnings enhancing during the 2016 financial year. Paragon said it would take Paragon Bank from its expected break-even level in 2016 to profitability. 

Five Arrows Leasing will form the basis for further SME finance development within Paragon Bank and it will be re-branded in the near future to reflect its change in ownership.

Paragon’s results for the year to September 30, 2015 will be announced on Tuesday November 24, 2015.