Mortgage network to be acquired in deal worth up to £12.9m
Property services business, LSL, has agreed to acquire TenetLime Ltd from Tenet Ltd, which is a subsidiary of Leeds-headquartered Tenet Group.
TenetLime operates a network providing services to 231 mortgage and protection advisers, operating within 133 appointed representative firms. Its advisers arranged around £3.9bn worth of mortgages in 2022.
The deal also includes consideration for the recruitment by TenetLime of 47 mortgage and protection advisers operating within 24 appointed representative firms, which are currently members of TenetConnect Ltd and TenetConnect Services Ltd, that are expected to transfer to TenetLime prior to completion.
The consideration payable is expected to be up to £12.9m comprising:
– an initial payment of up to £5.6m, calculated by reference to the number of appointed representative firms at completion and the turnover of these firms in 2022;
– a further payment of up to £4.5m, calculated by reference to the number of appointed representative firms 12 months following completion and the turnover of these firms in 2022; and
– an expected payment of £2.8m for assets which form part of TenetLime’s regulatory capital
The total consideration payable at completion is subject to adjustments based on the net asset value of TenetLime at that time.
David Stewart, LSL group chief executive officer, said: “I’m pleased we have been able to complete this transaction and I look forward to welcoming TenetLime’s advisers to our PRIMIS Network.
“The increase in membership will help us to further invest in our service offering to member firms as well as delivering scale economics to support further growth.
“The acquisition also underpins our leading position in the mortgage and protection network market and is fully aligned with our group strategy to develop our Financial Services Network business.”
The acquisition is being financed from LSL’s existing cash resources. As of 30 June 2023, the group had a net cash balance of £36m.
After a short period of transition, TenetLime members will be integrated fully into the operations of LSL’s PRIMIS Network.
TenetLime reported pre-tax profits of £900,000 for the year ended 30 September 2021, at which date it had gross assets of £10.1m.
This profit figure excludes the contribution of the 24 appointed representatives firms that are currently members of TenetConnect Ltd and TenetConnect Services Ltd and that are expected to transition to TenetLime before completion.
