JC Flowers to invest £50m in Kent Reliance

Private equity firm JC Flowers is in talks to fund a £50 million rescue of mutual Kent Reliance, in the first step of a plan to consolidate struggling building societies.

The investment will see JC Flowers, run by Chris Flowers, take a 49% stake in a new holding company to allow Kent Reliance to retain its mutual status. The building society’s 180,000 members will hold the controlling stake in the company.

According to The Sunday Times, Flowers is planning to use the deal as a launch pad for 10 similar deals. Former Financial Services Authority chairman Callum McCarthy will be chairman of the new, as yet unnamed, venture.

Kent Reliance chief executive Mike Lazenby (pictured) will take the same role at the enlarged group and will be tasked with leading consolidation.

JC Flowers will invest £500 million into the plan in a radical overhaul of the sector which has seen a number of larger building societies taking over smaller players as they struggled to meet capital requirements.

Talks between Kent Reliance and JC Flowers are thought to have started nine months ago and the FSA is believed to be working closely with the companies on the structure of the deal.