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KKR signs red hot deal for Pepper
Posted on Thursday, 10 August 2017 13:24
KKR's privately-owned investment manager is acquiring Pepper Group for AUD 675.90 million (USD 532.65 million) to boost its presence in Australia’s shadow banking sector amid increasing competition.
At AUD 3.60 apiece, the proposal represents a premium of 25.6 per cent to the one-month volume weighted average price (VWAP) and of 29.1 per cent to the three-month VWAP.
KKR Credit Advisors’ offer has already curried favour with shareholders, including the non-banking business’ chairman, chief executive and head of finance, who together hold or control a 35.5 per cent stake.
Pepper offers lending, advisory and asset servicing across the residential and commercial property sectors, as well as in consumer, auto and equipment finance.
The company specialises in flexible options based on individual credit assessment and is able to support those borrowers who fall outside the credit criteria of the major banks.
As a third-party servicer, it administers loan book on behalf of other financial institutions when they do not have the capacity.
Pepper has over 600,000 customers worldwide and AUD 50.80 billion in assets under management as at 31st March 2017, comprising AUD 7.70 billion in lending assets and a servicing portfolio of AUD 43.10 billion.
The group has a presence internationally, in South Korea, Hong Kong and China, as well as Ireland, the UK and Spain.
In the 12 months ended 31st December 2016, it had total revenue of AUD 684.60 million (FY 2015: AUD 527.73 million), pre-tax profit of AUD 79.31 million (FY 2015: AUD 10.20 million) and net profit of AUD 61.65 million (FY 2015: AUD 3.41 million).
Pepper gives KKR access to Australia’s mortgage market at a time when regulators have reportedly asked large banks to back away from risky lending and cool soaring interest-only home loans.
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