Alternative investment firms Värde Partners and KKR along with Deutsche Bank have agreed to buy GE Capital’s consumer finance business in Australia and New Zealand for an enterprise value of AUD$8.2 billion (€5.9 billion, $6.3 billion), the firms announced in a joint statement.
GE Capital’s Australia & New Zealand consumer lending business provides a range of services and products including personal loans, credit cards and interest free retail finance. It has more than 3 million customers and is a long-standing partner to leading retailers in Australia and New Zealand.
GE Capital’s Australia & New Zealand chief executive Duncan Berry said that the group remains committed to its growth strategy and will continue to build its mid-market lending portfolio and leasing businesses in the region. “Consumer finance has been a great business for GE and is well positioned for further growth,” he said.
Terms of the deal were undisclosed. KKR declined to comment beyond the statement while the transaction is subject to regulatory approval. Värde Partners and Deutsche Bank did not respond to a request for comment.
The group will look to securitise about A$7 billion of debt acquired from the GE unit, sources told Reuters. The agency reported that the consortium was unlikely to raise more than $2 billion domestically however, given the relatively small size of the local market. Hence the balance is likely to be issued offshore.
“We are delighted to be part of one of the largest private equity transactions ever in Australia and New Zealand with our world-class partners, KKR and Deutsche Bank. This investment demonstrates Värde's continued commitment to our Asia-Pacific business, and we look forward to working with the management team to grow the business and strengthen its retail partnerships,” Ali Haroon, Värde Partners' lead partner in the Asia Pacific Region, said in a statement.
George Hicks, a founding partner and co-chief executive officer of Värde Partners, said that the transaction “is a natural extension of our deep expertise in specialty consumer finance and a great fit for us”.
President and chief executive of GE Australia & New Zealand, Geoff Culbert, added that the transaction will allow GE to focus on providing speciality commercial finance services to industrial businesses in the area of infrastructure technology, such as oil and gas, energy, healthcare, aviation and mining.
Advisers to the acquiring consortium are Bank of America Merrill Lynch, Moelis and Citi. GE is advised by Credit Suisse and Morgan Stanley.