TPG Capital, the buyout group that abandoned its attempts to rescue Bradford & Bingley earlier in the year, has pulled out of the race to buy Paragon, the ailing buy-to-let mortgage lender.
Sources close to the Texan private equity group have confirmed to The Independent on Sunday that it is no longer interested in pursuing the Solihull-headquartered firm, leaving the private equity houses Blackstone and Apollo, which owns the Countrywide estate agent chain, to fight it out for Paragon.
"No, TPG is no longer interested in buying Paragon," said one source. "There will be no deal on this."
Shares in Paragon, which is being advised by UBS, jumped by more than 30 per cent at the end of July when details emerged of a prospective bid by TPG. However, it is thought that TPG's plans to roll up a number of UK lenders to sit alongside Paragon were scuppered when Alliance & Leicester was snapped up by the Spanish banking giant Santander for £1.26bn.
TPG's decision to once again drop out of a high-profile auction comes in the wake of its move to abandon a planned £179m cash injection for the buy-to-let lender Bradford & Bingley. The buyout house, led worldwide by David Bonderman and in Europe by Philippe Costeletos, ditched its planned rescue after B&B faced a downgrade in its credit rating by the Moody's agency. This enabled TPG to invoke a get-out clause.
Four City fund managers – Standard Life, Legal & General, Prudential and Insight Investments – eventually stepped in to fill the void left by TPG's decision. However, just two days ago it was revealed that underwriters in B&B will be left holding around 30 per cent of the remaining rights issue stock not taken up by investors.
B&B has been leaderless for several months pending the arrival of a new chief executive, Richard Pym, who formerly held the same post at Alliance & Leicester. It reports half-year figures on Friday, which are once again expected to disappoint.
TPG's exit from the Paragon bidding process comes at a difficult time for the group. Earlier in the year it was forced to go cap in hand to its investors for £287m as the extent of the downturn in the buy-to-let arena emerged.
Nearly 90 per cent has been wiped off the value of Paragon shares over the past year. They closed down 1.65 per cent on Friday at 108p.Reuse content