International law firm Freshfields Bruckhaus Deringer has advised The Royal Bank of Scotland PLC (RBS) as senior lender on an acquisition financing to an equity consortium led by Venn Partners LLP (Venn), a London based specialised credit investment boutique. Freshfields has also advised RBS, as arranger and manager, on a subsequent capital markets refinancing of the initial acquisition debt.

The financing has enabled the Venn consortium to purchase a portfolio of Dutch residential mortgage loans from GE Artesia Bank (GE).

The structure marks a major shift in the Dutch mortgage landscape. The Venn consortium is an alternative capital provider as a opposed to a financial institution and is the first of its kind to enter the Dutch mortgage market since the 2008 financial crisis. Market commentators expect this development to set a trend for other alternative capital providers to consider entering into European mortgage lending markets which are currently dominated by financial institutions.

The Freshfields team was led by finance partner Mandeep Lotay alongside partners James Grand and Eelco van der Stok and associates Wouter Jongen and Sabah Nawaz.

Mandeep Lotay commented: ‘The fact that the first new residential mortgage-backed securities issuance platform launched in The Netherlands since the credit crunch has been set up by an alternative capital provider is a major development in the financial sector here in The Netherlands. It will mean more competition amongst the players to attract customers in the residential mortgage space.

'The transaction is also stark evidence of a wider trend of European banks deleveraging by disposing of non-core assets. This is a response not only to deal with stricter European regulations on capital adequacy but a wider appraisal by financial institutions of their business lines. The deal also illustrates the growing interest of private equity in purchasing assets from financial institutions with a view to refinancing them through the capital markets. It was a privilege to work with RBS on this first of a kind deal in The Netherlands.’

Damian Thompson, Head of Asset Backed Finance at RBS commented: ‘This was a ground breaking transaction in the Dutch market, combining acquisition financing, a new mortgage platform, and a complex capital markets financing. It is an excellent example of how the links between local lending markets and global capital are developing, and will set the template for future deals in this and other European markets. As such it required a close and creative working partnership between the bank and Venn, and relied upon strong support from our advisors Freshfields.’

Gary Mckenzie-Smith, Managing Partner of Venn commented: ‘Whilst the business case for the creation of a new Dutch residential mortgage platform was compelling, as a non-bank we have had to address and overcome significant legal, regulatory and structuring issues on the bridge financing and the subsequent RMBS transaction. Many of these were ground-breaking, and the challenge was compounded by the continually evolving regulatory framework for securitisations. This put a premium on strong technical and creative advice, and we are delighted with the way the structuring group at Venn, RBS and their respective legal advisers worked together.’