Brookfield targets Japanese buyer for a $3bn sale of La Trobe

Brookfield wants more than $3bn for its La Trobe Financial.

Private equity groups are circling La Trobe Financial, but Brookfield’s big hope of gaining more than $3bn for the business may come from a Japanese buyer.

The North American private equity operator is going far and wide to search for a new owner, and it is targeting groups from Japan as part of its quest to sell the business for top dollar.

Japanese groups have a history of paying big prices for financial services businesses in Aus­tralia. The downside for any seller is that they take their time, and there’s often a lot of back and forward on price.

They are also risk-adverse, so La Trobe, which derives income from retail investors, may not be to their liking, shying away from the business when Blackstone had it on the market before.

If Brookfield wants a quick sale, perhaps a better bet may be a private equity group, but the compromise may be that it sells the business for a lower value.

Most recently in the Australian financial services space, ­Japanese firm Dai-ichi bought into Challenger, taking the 15.1 per cent share from its country rival MS&AD.

There’s many other examples of big financial powerhouses from the Asian nation investing in the sector here.

In 2016, Nippon Life bought NAB’s life insurance unit, paying $2.4bn for an initial 80 per cent before buying the rest, while Dai-ichi bought Suncorp’s life insurance unit in 2018 for about $725m before snapping up Westpac’s life insurance business in 2022 for $900m.

The Wall Street Journal reported last week that Japan’s economy shrank in the first quarter with fears that US tariffs could hurt the country’s hard-earned economic recovery by weighing on exports and making companies pull back on investment.

The situation could see Japan’s central bank hold off on its planned interest rate increases this year.

Interest rates there are 0.5 per cent, which means Japanese conglomerates have cheap debt to buy offshore where they can get higher returns on investments than in their home country.

Japanese groups that have invested in non-bank lenders include Shinsei Bank, an investor in the Kohlberg Kravis Roberts-backed Latitude Financial, listed on the ASX.

Shinsei is not thought to be a buyer, as it plans a stock exchange listing by next year.

Working on the sale of the business are Morgan Stanley and UBS. La Trobe Financial manages $20bn on behalf of mainly older high net worth investors with a key focus in real estate private credit. Brookfield bought La Trobe from Blackstone for $1.7bn in 2022.