By Jason Theodorou

Private equity firm JC Flowers is looking to buy part of Kent Reliance Building Society, in a joint venture which is intended to house all the building society's loans and deposits and allow Flowers to obtain a UK bank license to expand its operations.

Kent has 45 UK staff and £2.2 billion in loans and other assets. Kent will retain a 50.1% stake in the vehicle, which will give them a controlling interest in the operation - legally classified as a bank. Flowers will take a 49% share in return for a £50 million investment in Kent. The FSA is expected to approve the deal within the week.

Kent's 180,000 members will vote on the deal in October, and if it is approved it will be finalised in January. Flowers is alleged to have identified up to ten other businesses for takeovers, with the aim of creating a UK super-mutual. It is said to have up to £300 million funds available for investment.

The building society's stock exchange announcement said: "Kent Reliance Building Society today announces that it is in talks with JC Flowers & Co to create a new corporate structure for the Kent Reliance business".

"If the new structure proceeds, it would allow for substantial new capital investment to support the business and would provide a means for the Society's members to
remain members of a mutual organisation."

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