The Household Mortgage Corporation (HMC) was established as a start-up in 1986 to take advantage of the structural changes in the UK household mortgage market.
HMC created portfolios of residential mortgages that would then be refinanced through floating rate notes sold to institutional investors. When Cinven’s investors agreed to invest in HMC, this form of mortgage-backed securitisation was relatively new to the UK market.
The company planned to put in place efficient new systems that would allow it to compete favourably with building societies, hampered by branch networks and traditional operating methods. HMC’s mortgages would be sold through intermediaries such as financial advisors and mortgage brokers.
Of all of the centralised mortgage lenders HMC was probably the best organised and managed. It performed well from the start, achieved its aims in its early years and was sold to Abbey National in November 1994.
Multiple returned on investment: 2.6x