Acquisition of Ortus Secured Finance
Kvika Securities Ltd. (“KSL”), has completed the acquisition of a majority shareholding in Ortus Secured Finance Ltd. (“Ortus”). Following the transaction, KSL holds close to 80% of Ortus’ ordinary shares, having first acquired a minority share of 15% in a 2018 capital increase.
Ortus is a British alternative credit provider specialising in property backed lending to borrowers in the United Kingdom. The company was founded in 2013 and currently manages a ca. ISK 20 billion equivalent private credit-portfolio, of which ca. ISK 13 billion is held on Ortus’ own balance sheet. Ortus’ headquarters are in London and the company also operates offices in Belfast, N-Ireland and in Glasgow, Scotland. Since its launch in 2013, Ortus has advanced over ISK 85 billion equivalent to borrowers whilst experiencing no losses of capital.
Ortus will form an important part of Kvika’s UK operations. The transaction will add ca. 7% to Kvika Group’s total consolidated assets. Based on preliminary year end results, Ortus recorded a ca. ISK 700 million equivalent profit before tax in the year to December 2021. For 2022, Ortus is expected to generate profit before tax of ca. ISK 900 million equivalent.
The consideration is paid in cash at a total equity value equivalent to ISK 6 billion. Among seven sellers is Stodir hf., selling all of its 30% shareholding, and the management team of Ortus. Key members of the company´s management team will continue to hold over 20% of the shares in the company following the acquisition and will lead its daily operations alongside the company´s experienced team of professionals in the coming years. KSL will acquire the remaining shares in Ortus over the next four years at a valuation determined by the company’s results during the period.
Completion of the acquisition follows a comprehensive due diligence process that has been carried out since the heads of terms for the transaction were signed in late October 2021. Furthermore, KSL engaged Grant Thornton UK LLP to perform a fairness assessment of the transaction valuation. The fairness opinion provided by Grant Thornton confirms their view that the transaction value is fair from a financial point of view. Certain synergies expected to be derived from the Kvika ownership were not included in the valuation.
Marinó Örn Tryggvason, CEO of Kvika banki hf.:
“The acquisition of Ortus is in line with Kvika’s strategy of utilising its increased financial strength following the merger with TM to diversify its balance sheet abroad. To that end, we’ve communicated our ambition that Kvika’s UK operations will contribute at least 20% of the Group’s profit within a three-year horizon. The acquisition of Ortus is an important step towards realising that goal. Since KSL first acquired a minority share in Ortus, the company has delivered strong results. Ortus has significant opportunities for future earnings growth, including through improved cost of funding following the transaction.”
Richard Beenstock, CEO of Ortus Secured Finance Ltd.:
“Having worked closely with Kvika and the team at KSL for a number of years, we’re delighted to conclude a transaction that cements our close relationship. Kvika has been a reliable partner and provided consistent support for the business during its strong growth in recent years. The acquisition is testament to the hard work and success of Ortus’ outstanding team of professionals and we’re looking forward to continuing on our growth journey as part of the Kvika Group.”
