Firms could lose millions following collapse of Kenmore

Published on Friday 13 November 2009 20:51

THE collapse of the Kenmore Property empire into the hands of administrators has left several companies, including Anglo Irish Bank and property investor Revcap, facing losses running into tens of millions of pounds.

Other companies involved with Kenmore, including Royal Bank of Scotland and Legal & General, last night assured its investors that funds managed by Kenmore in which they are invested are safe.

The estimated 1 billion worth of assets managed by Kenmore in eight or more funds are managed in a complex web of more than 65 companies. The largest part of the operation was funded by its principle banker Lloyds. It is estimated that Lloyds holds debt and equity in Kenmore of more than 700m, including half of a 700m joint venture fund, Kenmore Capital.

In Edinburgh, Kenmore's 20m office development 102 Westport is weeks away from completion. Last night it emerged the building had been sold to an Irish property company, Alanis, and Anglo Irish Bank. Terms of the sale included a three-year lease agreement on completion. The building is not let and it is uncertain whether Kenmore will be able to honour this part of the deal. Directors of Alanis last night were not available for comment.

Several people behind the scenes have said the bank will be in no rush to sell the property assets taken under its control. Most of the Kenmore companies affected are in administration – backed by funds from Lloyds – which will ensure the companies will continue to operate as normal.

A source close to the deal said: "They will keep the company as a going concern and return as much value to shareholders – which is basically HBOS/Lloyds. They can sell them as and when but it is not going to be a fire sale."

Companies not in administration but in receivership are Kenmore Investments and Kenmore Capital 3, which hold assets estimated to be worth 94m between them.

Kenmore also had a 20 per cent stake in Arc Property Fund, a Jersey Property Unit Trust operated by insurance giant Legal & General. Last night, a spokeswoman for Legal & General said Kenmore's 20 per cent stake "would continue to be controlled by HBOS".

Kenmore manages funds worth at least 370m with private equity investors Revcap. Yesterday, Revcap refused to comment.

Adam & Company, a wealth management division owned by RBS, last night assured investers that assets of two funds – including the 100m Adam Second Property Partnership – were "ringfenced" and safe from insolvency. An RBS spokesman said: "

There is no need for investors to take any action at this stage."