Westpac sells vendor finance arm to Cerberus subsidiary for $430m
Westpac is selling its vendor finance unit to Angle Finance, the US-based asset finance firm owned by global private equity firm Cerberus Capital.
CEO of specialist businesses at Westpac, Jason Yetton, says “the sale represents the first transaction of the group’s simplification initiatives”
The acquisition, sealed on 20 August, sits at a value of AUD 600 million ($430.83 million), according to Financial Review.
Cerberus’ offer was in the works for months, after talks stopped before restarting again. It included debt finance from Morgan Stanley, SocGen and Citi.
Modest loan portfolio
The deal will see around AUD 500 million ($359.80 million) of loans belonging to Vendor Finance’s roughly 42,000 Australian businesses transferred to the US firm.
The Australian bank – one of the country’s big four – says the sale “is expected to have a negligible impact” on Westpac’s balance sheet and capital ratios.
The transaction, expected to close at the end of April 2021, is structured with an initial payment on completion, after which there will be a further deferred consideration payable over a two-year period.
Currently, Vendor Finance operates out of the Westpac subsidiary Capital Finance Australia. The bank will continue to operate and manage the other subsidiaries of this business unit.
Chief executive of specialist businesses at Westpac, Jason Yetton, says “the sale represents the first transaction of the group’s simplification initiatives”.
Westpac’s movements during COVID-19
For the first time in decades, the Aussie bank axed its prized dividend earlier this month. It also set aside an extra AUD 574 million to absorb bad debts during the pandemic.
The bank has also set aside AUD 900 million in its accounts to address ongoing dealings with financial regulator, AUSTRAC.
Westpac found 365,000 “incomplete or inaccurate” reports to the regulator concerning large funds transfer out of Australia. A further 175,000 transactions were not reported to AUSTRAC at all.
he regulator is hToping to eke out significantly more than Westpac’s AUD 900 million in reserves. Reports from the Sydney Morning Herald suggest AUSTRAC are seeking AUD 1.5 billion.
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