Through the issuance of Core Capital Deferred Shares, The Cambridge Building Society will receive an injection of capital that will support further growth of its business, enabling it to lend an additional £200 million. This additional lending will support 1000 local families or individuals buy a home in Cambridgeshire and this local benefit was a key driver for all involved.
The partnership is the first of its kind between a building society and a local authority pension fund and the model is expected to be of significant interest to funds and societies in other regions of the country.
Simon Warburton, finance lawyer at Mills & Reeve, the law firm who advised The Cambridge, said: “We were delighted to be able to support The Cambridge in this ground-breaking partnership with such significant local benefit. We relish the opportunity to help clients’ secure alternative sources of finance and meet their increasingly complex challenges.”
Sarah Seed, finance partner at Mills &Reeve said “The success of this transaction has wider implications for the building society sector. It shows that the issue of CCDS to fund growth is not just available to a society as big as the Nationwide (who issued a second tranche of CCDS on the stock exchange on the same day) but can also be scaled down and issued on a privately arranged, unlisted basis.”
Stephen Mitcham, Chief Executive of The Cambridge said: “This partnership marks the start of an exciting new era in the Society’s long history and will provide a bright and sustainable future for all existing and future members.
“The Cambridgeshire County Council Pension Fund is the ideal partner for The Cambridge as we share the vision of delivering long-term benefits for residents and the local economy. This synergy replicates the original founding of The Cambridge which was Cambridge people coming together to help themselves and others.”
Councillor Roger Hickford, Chairman of the Cambridgeshire County Council Pension Fund said: “The Cambridgeshire County Council Pension Fund welcomes the opportunity to invest in a long-established Cambridge-based business and in supporting local people in buying local homes. We applaud The Cambridge on this innovative share issue which will provide a stable and attractive investment return for our pension fund members.”
Peter Burrows, Finance Director of The Cambridge said: “The capital injection we receive will let us build on recent investments in the business as well as allowing us to lend more in the form of mortgages. The structure of the investment preserves The Cambridge’s status as a member-owned, mutual organisation. More people from across the region will be given the opportunity to own their own home, funded by a modern, forward-looking and wholly independent Society.”