A deal to create one of Europe's largest investment managers focused on specialist lending is underway, as Pollen Street Capital heads for a takeover of MW Eaglewood.
Pollen Street, the private equity firm which span out from Royal Bank of Scotland (RBS) in 2013, will combine through a share swap with MW Eaglewood, manager of the P2P Global Investments trust.
It will create an entity with more than £2bn in assets under management, with Pollen Street taking majority ownership.
P2P Global, which invests in consumer and small to medium-sized enterprise loans, launched a review in April after its shares began trading at a discount to the underlying assets.
The investment trust had suffered from exposure to US consumers, after a governance scandal at marketplace lender Lending Club roiled the industry.
Following the merger, it is understood the trust will invest in a broader range of specialised lending – a tactic which the board believes can deliver the trust's target return of six to eight per cent.
Pollen Street, headed by managing partner Lindsey McMurray who led the firm's spin out from RBS, already has a number of plates spinning.
As well as managing its own private equity funds focusing on financial services businesses, it also runs the Honeycomb Investment Trust credit fund.
Earlier this year, Pollen Street teamed with private equity firm BC Partners to make an £842m bid for challenger bank Shawbrook.
The bank urged shareholders not to accept the offer, after BC and Pollen Street made a second restructured bid when their first was refused. The offer remains outstanding, although a second close is due at the end of this week.