Private equity in move for HBOS assets

Bank approached over Keepmoat and Apollo, the housing divisions that could go after Lloyds merger
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The Independent Online

HBOS has been informally approached by private equity groups about buying its housing subsidiaries, Keepmoat and Apollo. The Scottish bank, due to merge with rival Lloyds TSB this week, bought the companies for £1.1bn two years ago. It is thought that Lloyds would like to get HBOS's declining housing assets off the books as soon as possible.

Cognetas, Warburg Pincus, 3i and Bridgepoint are all understood to have contacted HBOS over whether the companies are likely to be sold post-merger. Keepmoat and Apollo were bought using high levels of debt and Lloyds TSB-HBOS is unlikely to get back anything near what HBOS paid for the companies.

HBOS has heavy investments in housebuilding, one of the worst-hit sectors in the credit crunch. It also has stakes in the troubled retirement housebuilder McCarthy & Stone and in the ailing regeneration specialist Crest Nicholson.

A source said: "There is a lot of private equity sniffing around Keepmoat and Apollo. Every private equity group interested in housing is taking a look."

Lloyds TSB and HBOS are also understood to have lined up "outplace-ment" specialists – human resources companies that advise staff on future career moves – ahead of a redundancy programme that is likely to be heavy after the merger. Up to 700 retail branches could close.

Recruitment companies Penna Consulting, which is also working on the ABN Amro-Royal Bank of Scotland merger, and Savile Group, through its Fairplace career management subsidiary, are expected to be appointed to help with the redundancy process.

Although job losses have long been expected, it is predicted that the redundancy process will be accelerated as a result of the poor market conditions. "There is an enormous amount of duplication between the two banks," said a market source. "I wouldn't be surprised if quite a lot of the redundancies are made in the first half of the year."

The British economy has been badly scarred by job losses over the past few months. Car manufacturer Nissan announced last week that it would slash 1,200 jobs at its Sunderland factory, a third of its UK workforce.

Clifford Chance, the world's biggest law firm, said it would make up to 80 solicitors in the City of London redundant and is asking 400 equity partners to cough up £100,000 each to improve the company's capital position.

Several high-profile companies have also gone into administration, putting thousands of jobs at risk. Waterford Wedgwood, the luxury goods manufacturer that employs 2,700 people in the UK and Ireland, was one, but the company could be saved by New York-based private equity group KPS.

Waterford Wedgwood's chairman is Sir Anthony O'Reilly, the chief executive of Independent News & Media, the owner of The Independent on Sunday.

In the US, 2.6 million jobs were lost in 2008, the largest number since the Second World War. More than a fifth of these disappeared in December.