PE buyout firms Carlyle, TPG and Blackstone are apparently in discussions to buy Esanda, Australia’s second-largest motor vehicle financing business.
Citing a source involved in the process, Reuters reports the sale could fetch a price higher than the A$8.3 billion ($6.35 billion) book value of the loans.
PE firms circling Esanda
According to a Reuters report, Germany’s BMW AG, Australia’s Macquarie Group and a host of U.S. private equity firms including TPG, Carlyle, Blackstone are expected to bid for Australia and New Zealand Banking Group’s more than AUD 6 billion car and equipment loan book.
Germany’s automaker and Australia’s top investment bank besides the buyout firms have reportedly requested information memorandums for the sale.
Interestingly, the global players are evincing interest in the car finance unit, despite world financial markets tumbling on concerns of a Greek default. Such active interest suggests the sale will achieve its purpose of facilitating Australia’s third-largest lender to meet tough new requirements for higher cash reserves.
While spokespeople for BMW, Macquarie and Blackstone declined to comment, representatives for TPG and Carlyle were not immediately available to comment.
Macquarie, Australia’s biggest investment bank, would like to combine Esanda with its own vehicle financing business, Macquarie Leasing, the third-largest such business in the Australian market.
ANZ hired Deutsche Bank to sell Esanda. Deutsche Bank has distributed an information memorandum on Esanda to Carlyle, TPG and Macquarie. However, sources indicated that serious due diligence on Esanda has really yet to commence.
Citing another source involved in the process, Reuters reports that the bankers running the sale were expected to compile a shortlist of bidders within a week, after first-round offers closed on Monday. Subsequently, the bankers are expected to open the unit’s books for due diligence, a process expected to last about seven weeks, before calling for final offers.
Banks’ drive to boost capital ratios
The latest effort by ANZ underscores banks’ efforts to meet tough new requirements for higher cash reserves.
Earlier this month, Australia No.2-ranked Westpac Banking Corp announced its intention to sell down its shareholding in BT Investments from 59% to between 31% and 40% to raise about $700 million. The proceeds would go to enhance Westpac’s capital ratios – a measure that has been under increasing scrutiny in major Australian banks because of the demand for lending – by 10 to 15 basis points.
As reported by ValueWalk last March, GE Capital, the financing arm of General Electric Company, announced the sale of Australia and New Zealand loans business for an enterprise value of $6.3 billion (A$8.2 billion) to a consortium led by KKR & Co L.P.