Aldermore acquires £465m Octane Capital bridging portfolio assets

Aldermore Bank has acquired a £465 million portfolio of bridging finance loan assets from specialist lender Octane Capital, in a deal that gives the FirstRand-owned bank its first direct bridging origination capability and signals a significant strategic pivot towards higher-margin property lending.

The transaction, announced on 17 March 2026, was apparently funded entirely from Aldermore's existing cash resources, with no external debt raised and no equity issued. It is structured as a loan portfolio purchase rather than a full corporate acquisition, and no deal premium or goodwill figure has been disclosed.

Aldermore is a Reading-based specialist bank owned by South Africa's FirstRand Group, which acquired it for approximately £1.1 billion in 2018. The bank operates across property lending, business finance, motor finance and savings, with total customer lending of £16.6 billion as at 30 June 2025, up 8% year-on-year.

Despite that lending growth, Aldermore's statutory profit before tax fell to £193.5 million in FY2025, down from £253.1 million in FY2024, reflecting a £60.6 million charge related to the FCA's review into historical motor finance commission arrangements and the non-recurrence of prior year impairment provision releases.

The motor finance exposure has weighed on the bank's returns. Its return on equity dropped from 11.8% in FY2024 to 7.7% in FY2025, a trajectory that makes the higher-margin bridging sector an attractive diversification target. Bridging loans typically carry substantially greater spreads than conventional buy-to-let or residential mortgages.

Prior to this deal, Aldermore participated in the bridging market only through wholesale facilities, providing block bridging lines to independent lenders, rather than originating loans directly to end borrowers. The Octane acquisition changes that entirely, bringing both a substantial live loan book and the operational infrastructure to originate and manage bridging loans at scale.

Octane Capital was founded in 2017 by Jonathan Samuels, formerly chief executive of Dragonfly Property Finance. The business was backed by Pamplona Capital and positioned itself as a technology-enabled, high-quality bridging lender focused on speed and certainty of execution.

The company grew rapidly from its first loan completion in 2017 to passing £1 billion in cumulative lending and then, in September 2025, surpassing £2 billion in total originations. In 2024 alone, Octane lent over £250 million. Shortly before the deal, Samuels had publicly set a five-year target to double the loan book, making the timing of this exit notable and suggesting the sale may have been opportunistic rather than driven by operational necessity.

At the point of acquisition, Octane had built a portfolio of £465 million in live bridging loans - a figure that represents a meaningful market position in a sector where the entire UK loan book across all lenders stood at approximately £13.4 billion as at the end of Q4 2025.

The acquisition comes at a moment of exceptional activity in the UK bridging market. Total lender loan books climbed for a third consecutive quarter in Q3 2025, reaching a record £13.7 billion. This was up 4.3% on the prior quarter and 51.6% higher than September 2024. Completions totalled £2.5 billion in the three months to September, representing a 9.6% increase on Q2 2025 and 42% higher than the same period the previous year.

Applications for bridging finance reached £11.7 billion in Q4 2025, a 2.6% increase on Q3, while loans in default fell 6.2% quarter-on-quarter, pointing to stable loan performance and continued prudent underwriting across the market.

Demand has been driven by structural factors including lengthy conventional mortgage timelines, an active property auction market, and growing use of bridging finance by developers and investors as a strategic tool rather than a last resort. For an institution of Aldermore's scale and capital strength, entering through acquisition, rather than organic build, allows it to skip the cost and time of establishing broker relationships, credit frameworks and operational systems from scratch.

For Aldermore, the deal is a direct response to profitability pressure. Net interest margin tightened to 3.78% in FY2025 from 4.00% the prior year, while motor finance remediation costs continue to inflate. Bridging, with its short loan terms and higher pricing, offers a different risk-return profile that can lift group returns if managed effectively.

Aldermore's CET1 ratio stood at 14.9% post-dividend and its liquidity coverage ratio remained strong at 195%, suggesting the bank has adequate capital headroom to absorb the portfolio without straining its balance sheet.

Integration, however, presents a challenge. At least one long-serving Octane team member, with more than eight years at the firm, has publicly confirmed their departure following the deal - a signal that knowledge and relationship continuity will need careful management. Bridging lending is relationship-intensive, and broker confidence in a lender's speed and consistency of execution is hard-won and easily lost during operational transitions.

No advisers to either party have been publicly named in connection with the transaction. Aldermore's next half-year results, due later in 2026, will offer the first read-through of how the acquired portfolio performs on the bank's balance sheet and whether the strategic rationale translates into improved returns.

Financial terms beyond the £465 million portfolio value were not disclosed.

M&A in financial services - digitisation, disruption and divestments

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