Private equity giant KKR has agreed to acquire Australian non-bank lender Pepper Group for A$675.9 million ($532.5 million; €454.7 million), according to a company announcement.
Under the agreement, shareholders of Pepper will receive a cash payment of A$3.6 per share or an equity alternative to retain interest in the business. The scheme is expected to take place by the end of November this year.
“Pepper has distinguished itself as a diversified global financial services company with an excellent track record of growth into new products and markets. Pepper is positioned to thrive in the current market environment, and we are excited to work alongside the company’s world-class management team to help Pepper maximize its full potential,” said Daniel Pietrzak, managing director at KKR Credit.
The transaction will be fully funded by equity financing from KKR’s global alternative credit funds, PDI understands.
“KKR Credit has been active in buying lending and servicing operations globally. This investment represents an opportunity to potentially acquire a diversified set of specialty finance business lines and nurture each organically via M&A,” according to a source close to the matter.
Pepper Group provides lending, advisory and asset servicing across the residential and commercial property sectors, as well as in consumer, auto and equipment finance. The company is listed on the Australian Securities Exchange with over A$50.8 billion in assets under management as of 31 March 2017. This is comprised of A$7.7 billion in lending assets and a servicing portfolio of A$43.1 billion.
In 2015, KKR purchased GE Capital’s Australian and New Zealand consumer lending arm for A$8.2 billion in a consortium with Varde Partners and Deutsche Bank. The former GE lending arm has now been rebranded as Latitude Financial Services and offers low-document home lending and credit card services.
KKR has deployed more than A$3 billion across its credit, private equity, energy & resources and real estate businesses since entering Australia in 2006, which includes investments in Latitude Financial Services, Santanol and Sundrop Farms.