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What is the story about?
Blackstone Inc. has agreed to acquire an approximately A$36 billion ($25 billion) home and personal loan portfolio in Australia from HSBC Holdings Plc, in what is set to be one of the largest such transactions in the country's history.
The London-based bank said the disposal would result in an immaterial loss, along with some restructuring costs and write-offs, according to a statement on Friday confirming an earlier Bloomberg News report. The deal will help the US alternative asset manager expand its credit and insurance business, known as BXCI, across the Asia-Pacific region.
The transaction is expected to close in the first half of next year. As part of the deal, Pepper Money Ltd., an Australian non-bank lender backed by KKR & Co., will service the loan portfolio on behalf of customers.
"This marquee investment is a testament to the power of our franchise and our conviction in the growing opportunities in credit across Asia," Dan Leiter, Head of International at Blackstone Credit & Insurance, said in a separate statement.
Australia's A$2.5 trillion residential lending market is dominated by domestic banks, which rely heavily on home lending to support profitability. Commonwealth Bank of Australia holds the largest market share, although smaller competitors such as Macquarie Group Ltd. have expanded rapidly in recent years.
The country's housing market is currently facing a downturn as tax changes and higher borrowing costs curb investor appetite. National Australia Bank Ltd. said on Thursday that mortgage applications fell 15% in the June quarter.
Blackstone had $547 billion in assets under management across its credit platform, including BXCI and its real estate debt businesses, as of the end of June.
"We strive to oversee this portfolio thoughtfully and with discipline and remain committed to Australia as a highly attractive market for long-term credit investment," said Mike Culhane, Head of International Business Development for Asset-Based Finance at Blackstone Credit & Insurance.
Blackstone said it has invested in Australia for nearly two decades and intends to continue deploying significant capital to support the country's housing market.
The transaction aligns with Pepper Money's strategy to expand its capital-light servicing business, which provides annuity-style earnings, operational scale and diversification benefits, the company said in a separate statement on Friday.
The sale is the latest step in HSBC Chief Executive Officer Georges Elhedery's efforts to streamline the bank's operations. Under his leadership, HSBC has reduced management layers, cut jobs and exited non-core businesses. Last week, it announced the sale of its Singapore insurance unit to Allianz SE, while in May it agreed to sell its retail and wealth assets in Indonesia to Oversea-Chinese Banking Corp.
The remainder of HSBC Australia's retail business will be wound down in phases over the next 18 months, the lender said.
Citigroup Inc. acted as financial adviser to HSBC on the transaction, while Morgan Stanley advised Blackstone.
The London-based bank said the disposal would result in an immaterial loss, along with some restructuring costs and write-offs, according to a statement on Friday confirming an earlier Bloomberg News report. The deal will help the US alternative asset manager expand its credit and insurance business, known as BXCI, across the Asia-Pacific region.
The transaction is expected to close in the first half of next year. As part of the deal, Pepper Money Ltd., an Australian non-bank lender backed by KKR & Co., will service the loan portfolio on behalf of customers.
"This marquee investment is a testament to the power of our franchise and our conviction in the growing opportunities in credit across Asia," Dan Leiter, Head of International at Blackstone Credit & Insurance, said in a separate statement.
Australia's A$2.5 trillion residential lending market is dominated by domestic banks, which rely heavily on home lending to support profitability. Commonwealth Bank of Australia holds the largest market share, although smaller competitors such as Macquarie Group Ltd. have expanded rapidly in recent years.
The country's housing market is currently facing a downturn as tax changes and higher borrowing costs curb investor appetite. National Australia Bank Ltd. said on Thursday that mortgage applications fell 15% in the June quarter.
Blackstone had $547 billion in assets under management across its credit platform, including BXCI and its real estate debt businesses, as of the end of June.
"We strive to oversee this portfolio thoughtfully and with discipline and remain committed to Australia as a highly attractive market for long-term credit investment," said Mike Culhane, Head of International Business Development for Asset-Based Finance at Blackstone Credit & Insurance.
Blackstone said it has invested in Australia for nearly two decades and intends to continue deploying significant capital to support the country's housing market.
The transaction aligns with Pepper Money's strategy to expand its capital-light servicing business, which provides annuity-style earnings, operational scale and diversification benefits, the company said in a separate statement on Friday.
The sale is the latest step in HSBC Chief Executive Officer Georges Elhedery's efforts to streamline the bank's operations. Under his leadership, HSBC has reduced management layers, cut jobs and exited non-core businesses. Last week, it announced the sale of its Singapore insurance unit to Allianz SE, while in May it agreed to sell its retail and wealth assets in Indonesia to Oversea-Chinese Banking Corp.
The remainder of HSBC Australia's retail business will be wound down in phases over the next 18 months, the lender said.
Citigroup Inc. acted as financial adviser to HSBC on the transaction, while Morgan Stanley advised Blackstone.
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