Starling Bank acquires Fleet Mortgages

27th July 2021

Starling Bank has agreed to a £50 million deal to acquire for buy-to-let mortgage group Fleet Mortgages.

The deal is the first acquisition by the Goldman Sachs-backed start-up that is targeting an initial public offering within two years.

Fleet Mortgages, based in Hampshire, focuses on providing mortgages to professional and semi-professional buy-to-let landlords, only via mortgage adviser distribution channels.

Established seven years ago, Fleet manages £1.75 billion of mortgages and anticipates originating another £800 million this year. The acquisition comes just days after Starling reported 600% in revenue growth to nearly £97.6 million in the 16 months to March 2021, and unbroken monthly profit since October last year.

To date, it has originated £2.3 billion of mortgages and experienced zero credit losses. It currently has circa-£1.75 billion of mortgages under management. Starling will become the sole funder of future originations, with Fleet Mortgages able to build on its successful lending operation by accessing Starling’s growing deposit base. Day-to-day operations at Fleet will continue unchanged with the company’s existing management team.

Bob Young, CEO of Fleet Mortgages, said “We are very pleased to be announcing the acquisition of the business by Starling Bank which will deliver a significant benefit to our company, our intermediary partners and their landlord clients, particularly in terms of reduced cost of funds providing us with the ability to deliver highly-competitive products.”

“It is certainly exciting times ahead for everyone associated with Fleet and, with new, ambitious shareholders on board, it allows us to potentially move into new product sectors and further grow our market share. This acquisition opens up a range of opportunities that otherwise wouldn’t be available to us.”

“We started Fleet Mortgages seven years ago and have grown to become a successful mortgage originator with nine well-received securitisations. 2021 is set to become our best year yet with new mortgage loans running at £800 million and half-year pre-tax profits of £4 million.

“Starling Bank will take over all of our funding, allowing us to focus on achieving our significant and ambitious lending and growth targets. This is a natural progression for our lending business, with both Starling and Fleet sharing a very similar cultural fit and provides us with a very strong lending base from which to work from and to deliver for our staff, our adviser partners and our landlord customers.”

Anne Boden, CEO of Starling Bank, said: “The acquisition of Fleet Mortgages is the start of our move into mortgages as an asset class and builds on a number of forward-flow arrangements that we’re doing with leading non-bank lenders.”

“Fleet’s existing management team will remain in place and Fleet will continue to operate as a stand-alone company, keeping the original name and brand. We’re buying Fleet because it is very good at what it does, not because we want to change it.”