Pepper Group IPO

Pepper Group cranks up $1bn float plan

BRIDGET CARTER AND GRETCHEN FRIEMANN - THE AUSTRALIAN

11 FEB, 1:15 AM

Pepper Group is ramping up plans for an initial public offering, drafting in investment bank UBS in anticipation for a deal that would create a listed non-bank lender worth about $1 billion.
The IPO has been slated for the second half the year and comes after the bank held offshore meetings in recent weeks concerning the company, which some have linked to the group’s IPO plans.
UBS managing director Shane Doyle is driving the transaction, and while UBS is not said to have been close to Pepper, it is one of the dominant deal-makers in Australia’s equity capital markets.
Mr Doyle did not return a call yesterday.
Other Australian institutional investors are expected to meet with Pepper management in the weeks or months ahead.

Pepper has been seen as somewhat of a rising star in the finance industry, increasingly competing with heavyweights when it comes to recent acquisitions of major loan portfolios.
Run by Mike Culhane and Patrick Tuttle, its operations are global and generates earnings from loans, particularly those offshore, and fees from servicing portfolios of third-party commercial and residential loan portfolios.
A potential float of the lender has been on the cards as part of its quest to gain more access to capital, as first flagged by The Australian last year.
In 2013, the company’s overall assets were worth $4.1bn, according to IBISWorld.
Annual revenue has grown from $74m in 2009 to $329.9m in 2013 and net profit has almost doubled in that time to $28.8m.
But Pepper’s year-on-year growth is said to have been particularly strong in the past two years and is one of the bidders for the $7.5bn GE Capital Australian and New Zealand consumer finance portfolio in a consortium with Macquarie Group.
The GE sales process, run by Credit Suisse and Morgan Stanley, is heating up, with the process now shaping up to be a showdown between the private equity giants.
The TPG Capital consortium and a bidding team headed by Kohlberg Kravis Roberts are expected to be the two top bidders that will battle it out when final bids are due on March 10.
Flexigroup had recently partnered with KKR in the contest, but in the past two weeks it split from the private equity firm.
The group could now be in talks with other contenders for the business, and a scenario could unfold where Flexi buys part or all of the business from the successful suitor once the sales process is finalised.
It is understood that while Flexi initially thought that concerns from the Australian Competition & Consumer Commission could have prevented a deal, the more pressing factor surrounding its exit from the process was GE’s reluctance to grant its major rival access to the dataroom.
Other parties said to be in the running to buy what is commonly known as GE Money is Japanese bank Orix and private equity firm Apollo, advised by Nomura.
The business is tipped to be sold for about $2.1bn and a float is not said to be dependent on the company winning the contest.
This article first appeared in The Australian Business Review.

source