Paragon Banking Group (LSE:PAG), the specialist lender, is selling its Specialist Fleet Services (SFS) subsidiary to NRG, one of the UK's largest specialist fleet management companies, in a disposal that will add approximately £40 million to the group's tangible net assets after a goodwill allocation.
SFS, which focuses on municipal vehicle support and leasing to local authorities and private waste operators, had net assets of £10.1 million and carried £33.2 million in intra-group funding as of 31 March, implying total consideration in the region of £43 million before the goodwill deduction.
The 0.5 percentage point gain to Paragon's common equity tier 1 (CET1) ratio is the more immediate investor significance: Paragon says the freed capital will be redeployed into its Commercial Lending division to support further growth there.
Paragon originally acquired SFS as part of its purchase of Five Arrows Leasing Group in October 2015, making this an eleven-year hold.
Chief executive Nigel Terrington CBE said the sale "will simplify Paragon's operational platforms and the additional capital created will be used to continue supporting growth in our Commercial Lending division."
Around 100 employees based in Northampton and UK workshops will transfer to NRG under TUPE regulations on completion.
