New York-based alternative investment firm Cerberus Capital Management is understood to be moving forward with plans to compete for Westpac’s $11bn auto loan portfolio, according to sources.
Run by co-founder Steve Feinberg, Cerberus has $US45bn ($58bn) worth of assets across credit, private equity and real estate platforms under its control and has been an active participant in the Australian market of late with a focus on finance assets.
Cerberus has a managing director based in Sydney, as well as offices in the US, Europe and Asia.
DataRoom revealed last week that moves were afoot to ramp up the $2bn-odd sales process for the Westpac auto loan assets, with adviser Morgan Stanley asking possible buyers to sign non-disclosure agreements to obtain documents relating to the sale.
Last year, Cerberus bought Westpac’s Vendor Finance business through its company Angle Finance, securing control of a loan portfolio worth about $500m.
It also looked at ANZ’s UDC finance business in New Zealand.
Apollo Global Management is also expected to line up, along with other global funds such as KKR, TPG Capital, The Carlyle Group, Bain Capital, Brookfield, JC Flowers, BGH Capital and Kohlberg Kravis Roberts.
Japanese auto loan providers could also enter the frame.
Sources say that on offer is mostly a portfolio of loans for new cars along with some wholesale dealer finance.
The division — comprising loans from Bankwest and AGC portfolios purchased over time by Westpac — writes about $5bn of new loans annually.
The lingering question for prospective buyers is the level of profitability under new ownership, given that Westpac has a low cost of capital at about 4 or 5 per cent, which may make turning a profit difficult for a buyer at that rate.
Morgan Stanley is ramping up sale plans as Goldman Sachs prepares Westpac’s Panorama wealth management platform to be offloaded.
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