Paragon to sell Specialist Fleet Services unit for £85.6 million
Paragon Banking Group PLC on Monday said it has agreed to sell its Specialist Fleet Services Ltd subsidiary to NRG Fleet Services Ltd for £85.6 million, with proceeds set to support growth in its commercial lending business.
The mortgage lender and provider of personal loans and business financing said the transaction includes the settlement of SFS’s intra-group debt and is expected to complete in July.
At March 31, SFS had net assets of £10.1 million and intra-group funding of £33.2 million.
Paragon said the disposal will generate a gain which, after the allocation of goodwill relating to its acquisition of SFS, is expected to add around £40 million to tangible net assets and increase its common equity tier one ratio by 0.5%.
SFS was acquired as part of Paragon’s takeover of Five Arrows Leasing Group Ltd in October 2015. The business provides municipal vehicle support and leasing services to local authorities and private waste operators.
Paragon Chief Executive Nigel Terrington said: ‘NRG is one of the UK’s premier specialist fleet management companies and we believe being part of NRG will support SFS in reaching its true potential.’
He added: ‘At the same time it will simplify Paragon’s operational platforms and the additional capital created will be used to continue supporting growth in our Commercial Lending division.’
Shares in Paragon Banking were up 0.2% at 767.50 pence in London on Monday morning.
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