Paragon forms joint venture as profit falls 23%

Permalink: Paragon forms joint venture as profit falls 23%
by Gill Montia

Buy-to-let lender, Paragon, has reported a 23% fall in underlying profit for the year to the end of September, to £66.9 million.

The company was forced into an emergency fundraising in February of this year and then severely restricted lending as the cost of funding its business on the wholesale money markets soared.

The group has since focused on managing its existing mortgage portfolio and has plans to increase profit by buying loan portfolios from other lenders in the buy-to-let sector, via a joint venture known as Idem Capital.

The firm is reported to be teaming up with CarVal Investors, which describes itself as a leader in managing opportunistic value investments with over $9 billion in assets under management.

According to news agency, Reuters, CarVal and Paragon may be interested in buying loan books of between £50 million and £1 billion.

Paragon has also reported that 0.53% of its mortgage book was three months or more in arrears at the end of September.

The figure is up from 0.18% year-on-year but still well below the buy-to-let industry average of 1.71%, as calculated by the Council of Mortgage Lenders.