Pepper Money has finalised the terms to acquire 100% of the second charge lender, Optimum Credit Ltd, from its current owner Patron Capital.

The purchase, which remains subject to regulatory approval, will see Pepper Money acquire Optimum Credit’s entire business, which includes a UK second charge loan book of more than £450 million.

Optimum Credit, which is based in Cardiff, was launched in 2014 and offers a range of variable, fixed and discounted second charge mortgages to homeowners in England, Wales and Scotland.

The business is expected to continue its current strategy in relation to second charge mortgage origination, drawing on existing funding methods including public capital markets issuance.

Earlier this month, Pepper Money announced that it has commenced initial discussions with the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) with a view to commencing a project to seek authorisation for a banking licence.

Laurence Morey, CEO of Pepper Money, said: “Earlier this month, we announced that Pepper Money was starting the journey of seeking a banking licence and that we would be considering targeted acquisitions to complement our organic growth plans for the business.

“We are delighted to have been able to agree the purchase of Optimum Credit, subject to receipt of regulatory approval.

“I am pleased to welcome the market leading team at Optimum Credit into the Pepper Money family. We are looking forward to how this acquisition will enhance the growth of Pepper Money’s intermediary led secured lending proposition and are excited at the prospect of supporting the Optimum Credit team in the continued development of their unique proposition supported by excellent systems and intermediary relationships in an exciting market segment.”

Sam Marshall, CEO at Optimum Credit, added: “We are pleased to be joining the Pepper Money team in the UK, Pepper Money has shared a very similar development journey to ours at Optimum Credit, we share a common culture and entrepreneurial approach with the intermediary and UK residential property owner at the core of our proposition.

“This acquisition will give Optimum Credit access to a wider range of resources and shared expertise that will enhance our business and enable our continued growth.”