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HBOS to raise £400m fund to take on portfolio companies

Bank of Scotland is to raise a £400m (€500m) fund that will acquire stakes in companies already owned by the bank’s integrated finance division.

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Bank of Scotland is to raise a £400m (€500m) fund that will acquire stakes in companies already owned by the bank’s integrated finance division.

HBOS suffered a 72 per cent fall in interim pretax profits earlier this month and has asked UBS to raise the fund from private investors, the Financial Times reports.

The fund will allow the bank to reduce its balance sheet and step back from certain areas of activity.

The fund will buy stakes in about six companies, such as social housing maintenance business Keepmoat and crane hire operator Ainscough Crane Hire. HBOS is expected to retain stakes in the investments.

In a statement HBOS said the fundraising was the “next stage in the evolution” of its integrated finance business, which provides equity and debt for buyouts.

“The next stage in the evolution of this integrated finance strategy is the creation of an integrated finance fund enabling other investors – typically long-term partners of Bank of Scotland – to invest alongside the group in specific companies the bank has an ongoing relationship with. The launch of this fund has been in the planning for over a year,” the bank said.