Close Brothers flogs brewery rental unit amid simplification drive
The group, which last week revealed an overhaul of its premium finance division, told investors on Tuesday it would sell Close Brewery Rentals to MML Keystone, a fund managed by MML Capital, for an undisclosed fee.
Close Brewery Rentals, which Close Brothers has owned since 2007, sells, rents and maintains beer kegs and casks to breweries and distilleries across the country. Their kegs are identifiable by their branded orange stripes around the barrel.
'The sale aligns with the group's strategic priorities to simplify our portfolio, improve operational efficiency and drive sustainable growth,' the group said.
It added that the sale is expected to generate 'a modest gain on disposal and capital benefit', but is unlikely to have a 'material ongoing impact' on profits.
Close Brothers last week announced it would refocus its premium finance business towards commercial lines and away from retail lines.
It comes ahead of the Supreme Court's decision on the scale of compensation required in the wake of the motor finance commissions scandal, which has weighed heavily on Close Brothers and other lenders.
Analysts at Shore Capital said they expect 'further announcements of a similar nature to follow'.
They added: 'We await news from the Supreme Court on the motor finance commissions appeal, which is expected imminently and should help to provide further clarification around industry redress risk, pending the design and implementation of a subsequent FCA redress programme, should this be required.'
Close Brothers said it will remain a 'key specialist lender in the beverage finance market', and continue to provide finance solutions for brewery and distillery equipment.
Close Brothers Beverage Finance's loan book was worth roughly £35million as of 31 January, according to the group.
Boss Mike Morgan, Group Chief Executive added: 'Over the past 18 years, we have successfully grown the brewery rentals business to now serve over 500 breweries in the UK & Ireland.
'We believe that this is the right time to sell CBRL given the capital needed to maximise its growth potential and our focus on simplifying our business portfolio.
'We thank the CBRL team for their hard work and dedication and wish them well in this exciting new chapter. Whilst we are selling the brewery rentals business, we will continue to offer funding solutions to the UK beverage finance market, where we see attractive growth opportunities.'
Close Brothers shares were up 0.8 per cent to 401.8p in early trading.
They have added around 70 per cent since the beginning of the year as investor concerns over the scale of potential motor finance payouts have eased.
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