The private equity teams eyeing an investment in British mortgage lender Paragon Group of Cos. plc, which specializes in 'buy-to-let' mortgages to small landlords, are pushing ahead with the due diligence process, but watching warily as the target's share price bounces back from last month's lows.
Continue reading below
Blackstone Group LP and London buyout shop Bridgepoint Capital LLP declined to comment Thursday on a report in the Financial Times that the process could be finished as early as next week, but sources said that the potential bidders and their bankers had 'teams of slaves' testing the various models and special purpose vehicles underlying Paragon's large number of residential mortgage-backed securities. "There's a large amount of work to be done and it's a long process." Even if the due diligence is completed quickly, said another, there are still serious funding issues. In the end the whole thing could fall apart. With Paragon's share price now hovering around 111 pence; up from 47 pence at its July 8 low the company now has a market cap of around £ 333 million. Any other potential buyers reportedly waiting in the wings, such as J.C. Flowers & Co. or even Apollo Management, might find it as difficult to justify an investment as others before them. -- Jonathan Braude
