Brookfield’s assessment of La Trobe Financial sale to come to a head in coming weeks
As the private equity firm navigates Healthscope being in a perilous state, it is also actively assessing whether to divest Melbourne-based La Trobe Financial.
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There’s never a dull moment in Australia for private equity behemoth Brookfield. As the firm attempts to navigate Healthscope being in a perilous state, it is also actively assessing whether to sell Melbourne-based asset manager and non-bank lender La Trobe Financial.
Additionally, Brookfield is one of a trio of offshore-headquartered private equity suitors separately bidding for ASX-listed Insignia Financial in an intense tussle to win board support and control of the wealth group.
It’s certainly a delicate balancing act for Brookfield’s private equity managing partner Len Chersky.
Working in his favour, though, since the firm bought La Trobe in 2022, is that Brookfield has engaged a host of times with potential investors in markets including Singapore, Japan and South Korea.
That active communication about the company and its earnings drivers may pay off in 2025, if Brookfield proceeds with a La Trobe sale process, a decision which may happen in coming weeks if the firm opts to appoint an investment bank to manage an auction. That assessment is already underway and bankers are jostling for a role.
Brookfield recently started considering a divestment of La Trobe after fielding inbound interest, which may see the company attract a price of $2.5bn to $3bn-plus, including debt.
But a La Trobe exit via public markets, through an initial public offering, can almost be ruled out given a tepid market for private equity-led floats, and the fact lenders such as Pepper Money, Liberty Financial and Latitude Group haven’t traded well on the ASX.
Brookfield has kept La Trobe’s management aligned with the business as equity holders, so it will be interesting to see how the situation plays out.
La Trobe is led by chief executive Chris Andrews, who is flanked by finance boss Martin Barry and investment chief Chris Paton.
There is about $12bn being housed in La Trobe’s Australian credit fund and in total the company has more than $20bn under management.
Potential buyers or investors in La Trobe will, however, want to run a rule over the loan book and assess credit quality.
This column understands La Trobe has some relatively small loan exposures to under-pressure pub baron and former dealmaker Jon Adgemis, but they are by way of secured residential and commercial property, through first mortgages.
La Trobe’s latest accounts lodged with the corporate regulator show earnings before interest tax, interest, depreciation and amortisation amounted to $277.4m in the year ended June 30, 2024, versus $231.9m in fiscal 2023. Sources said EBITDA in the six months ended December 31 was exhibiting double-digit growth.
La Trobe’s investment arm includes an Australian credit fund and its US private credit trust. And given market developments it wouldn’t be a surprise to see it push into listed funds too.
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