Westpac runs secret auction to sell equipment finance, bids land

Cerberus is one of the largest investors globally in financial services businesses and platforms, and the largest acquirer of non-core and legacy loan portfolios. It is also seeking to bolster its Australian portfolio, having acquired defunct small business financier Axsesstoday and non-bank lender Bluestone Group in the past two years.

Embattled regional lender Bank of Queensland, which bought a similar portfolio from Investec in 2014, is another logical acquirer. However, sources said BOQ’s involvement was unlikely and queried how such a deal would fit with new CEO George Frazis’ as-yet-unexplained strategy. Frazis has bigger problems to solve.

A BOQ spokeswoman declined to comment.

Macquarie Group, which has substantial interests in asset financing in Australia and offshore, was part of the auction but dropped out, sources said.

Private equity firm Affinity Equity Partners is another understood to have taken a look at the portfolio recently.

Up for grabs is part of the Lloyds Banking Group portfolio that Westpac acquired in 2013. Westpac paid $1.45 billion for assets worth $8.4 billion, which were split across equipment finance, motor vehicle finance and a corporate loan portfolio.

It is the equipment finance business believed to be on the block. It had $2.9 billion in lease receivables and 62,000 corporate and business customers when it went into the Westpac machine in 2013.

The underlying equipment included “low risk motor vehicle and machinery assets associated with waste management, mining, construction and transport industries” the country’s second biggest bank told investors at the time.

The book is believed to be materially similar in 2019 and would likely be worth $600 million to $700 million, analysts said.

For Westpac, the potential sale is all about the bank’s capital and return on shareholder funds, and whether the portfolio may be more valuable in the hands of another owner.

A Westpac spokesman declined to comment.

Sources said the process’ structure – and late stage – meant Westpac was likely a serious seller. It has held talks with potential buyers numerous times in the past two years.

Source link Finance News Australia

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