The UK government has been granted the go-ahead to allow private investors to take over FCA Finance, which has been trading as FCA for more than a decade.
It will also allow FCA to raise up to £1bn of funding, as well as allowing private equity firms to buy up some of the company’s debt.
Home buyers are likely to benefit from the takeover because FCA will now have more than half of the market, compared to about 40% currently.
FCA shares rose 1.5% to 1,095p, while the benchmark Standard & Poor’s 500 index closed 1.8% higher.
“It’s going to help a lot of people out.
They’re going to get access to the value they’ve been looking for,” said John McLean, a UK property broker at Capital Wealth.
“They’ll be able to see their property prices go up and they’ll be better able to invest their money.”
FCA, based in the UK, employs about 600 people.
It also has a joint venture with Home Capital Group, which is the UK’s largest private equity investor, but has been unable to take the company public because of the EU’s financial troubles.
It is the latest in a string of companies that have been sold off by governments in recent years, including Royal Bank of Scotland, BNP Paribas and HSBC Holdings Plc.
Some of the biggest UK acquisitions of recent years have come from private equity investors.
The latest deals included the sale of the British Airways Group to Royal Bank, which owns the London Underground.
The airline was privatised last year and sold for a record £5bn to Chinese billionaire Lei Jun. The government has also bought the British company’s stake in the city’s main shopping centre, Kings Cross, and its stake in a local authority.
Home and property are among the sectors that will benefit from a takeover of FCA.
“This is going to create a huge amount of new wealth,” said Mike Hickey, chief executive of the National Association of Real Estate Agents.
“There are a lot more homes being built than there are people, so that’s a huge boost.”
He expects the move to encourage housebuilding, which accounts for a quarter of the UK economy, and to create more housing supply.
The new ownership will not only have access to FCA’s shares but will also have the ability to invest in other companies.
“The whole business is going into the new owners portfolio,” he said.
“So it’s not just about one company, it’s about how many businesses will be linked to it.”
The government also has the right to sell FCA if it decides that it is not profitable.
In the past, governments have used their leverage to try to buy out rivals, but in this case, the government has the option of buying out the whole company.
The UK’s government has taken an interest in FCA over the years, but it has not been a priority until now.
In 2012, the Treasury decided to buy FCA outright, but the Government decided not to sell because of regulatory uncertainty.
“We think this is a huge opportunity for the UK to become a centre for the world’s fastest growing private equity industry,” said Nick Whitehead, a former UK deputy prime minister.
“If the government gets the right deal and this private equity company is successful, it will be a game-changer for the future of finance in the country.”