Hedge Fund Giants Said to Line Up for U.K.'s Biggest Asset Saleby
The British government selected CarVal Investors LLC and Elliott Management Corp. to enter a second round of bidding for its largest-ever disposal of U.K. financial assets, according to two people familiar with the process.
The U.S. hedge funds are among as many as eight companies seeking to purchase as much as 15.7 billion pounds ($19.4 billion) of mortgages from a lender rescued by the government during the financial crisis, said the people, who asked not to be identified because they’re not authorized to talk about it. Blackstone Group LP and Cerberus Capital Management LP are also on the shortlist, people familiar with the matter said on Friday.
The sale of Bradford & Bingley’s loans will exceed the previous record of 13 billion pounds of Northern Rock mortgages sold to Cerberus in November last year. Chancellor of the Exchequer Philip Hammond, who restarted the disposal process in October after halting it following the nation’s June 23 vote to leave the European Union, is looking to dispose of bailed-out banking assets stuck on the U.K.’s books since the crisis.
Officials at CarVal and Elliott declined to comment on their firms’ involvement in the bidding process. A spokesman for U.K. Asset Resolution Ltd., the body that has managed Britain’s fully nationalized banks since the crisis, declined to comment on which investors were shortlisted.
The U.K.’s biggest banks are preparing to help back investors seeking to buy the assets. That’s in part because it could save them hundreds of millions of pounds in annual contributions to the Financial Services Compensation Scheme deposit-protection program. The lenders have collectively paid more than 2 billion pounds to the FSCS since 2009 to cover interest on a loan that funded the 2008 rescue of Bradford & Bingley, according to data on the agency’s website.