Startline, Blue Motor Finance seen as sale prospects after UK court ruling – Reuters

According to Reuters, car finance providers Startline and Blue Motor Finance could soon be up for sale following a UK Supreme Court ruling that has significantly reduced the potential compensation burden facing the sector. Analysts and advisers also told the news agency that larger lenders such as Aldermore and Close Brothers may draw interest from buyers as confidence returns.

The August ruling overturned much of a lower court decision on car loan sales practices, with several advisers estimating the final industry bill could be less than half the original £30 billion ($41 billion) projection.

“This is the real activity that will start now,” Hyder Jumabhoy, a partner at White & Case, told Reuters, saying owners now have “enough clarity to begin preparing [lenders] for sale” even as they await details of the final redress scheme.

Cabot Square Capital has already hired BNP Paribas to handle a sale of Blue Motor Finance, two people familiar with the matter told Reuters. Blue Motor posted an £8.5 million loss on £53 million in revenue in 2023. Startline, owned by US hedge fund The Baupost Group, could also come to market, with its latest accounts showing £100.3 million of income and a £4.25 million loss.

“There’s a series of highly attractive assets which have sat in private equity portfolios for longer than expected,” Elliot Reader, director at Houlihan Lokey, told Reuters, adding that “regulatory or macro reasons” had delayed exits until now.

The ruling has also prompted speculation about larger players. Moody’s analysts noted in June that specialist lenders such as Aldermore (owned by South Africa's FirstRand) and Close Brothers could be acquisition targets. Both firms were closely involved in the legal challenge that led to the Supreme Court’s 1 August decision. Close Brothers’ shares have jumped about 25% since the ruling.

Still, some remain cautious. “Does [the ruling] pave the way for future M&A activity in the motor finance space given recent inactivity? Yes, but I'd expect any meaningful movement to emerge throughout 2026,” Antony Walsh, partner at Eversheds Sutherland, told Reuters.

The Financial Conduct Authority is now designing a compensation scheme for car loans involving discretionary commission arrangements, with mid-range estimates of £9-18 billion now seen as more realistic.

Despite this, the UK motor finance market remains robust. Around 80% of all new cars sold to consumers in the 12 months to April were financed, with total outstanding point-of-sale contracts valued at roughly £86 billion as of June, according to the Finance & Leasing Association.

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FirstRand, owner of Aldermore, told Reuters it is not considering a sale, while Close Brothers declined to comment. We approached Startline and Blue Motor Finance for a comment, but the two had not responded at time of going to press.

"Startline, Blue Motor Finance seen as sale prospects after UK court ruling – Reuters" was originally created and published by Motor Finance Online, a GlobalData owned brand.

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