Goldman, Macquarie nab Pepper IPO mandates
Non-bank lender Pepper Group has mandated Goldman Sachs and Macquarie Capital to work on the company's potential $1 billion ASX listing.
As revealed by Street Talk online, Pepper's management is considering an initial public offering for the second half of 2015 and appointed the two investment banks as part of the deliberations on Tuesday.
Pepper is a non-bank lender, mortgage book owner and originator with $4.9 billion in assets under management in Australia and another $23.5 billion under management in Europe.
Its Australian business is understood to focus on mortgage origination and lending, while the European unit focuses on servicing loans.
The company is best known in capital markets as a fierce competitor at loan book auctions. It recently tried to bolster its Australian arm with the purchase of GE Capital's Australian consumer finance business, but was outbid by a consortium including KKR & Co, Varde Partners and Deutsche Bank.
It also took part in auctions arranged by Investec Australia and Lloyds' motor leasing business in the past 18 months.
Goldman Sachs and Macquarie, along with Pepper's independent adviser Highbury Partnership, are expected to get working on the pitch to potential investors.
Sources said Goldman Sachs had a long-standing relationship with Pepper in Europe, while Macquarie worked alongside Pepper on the recent GE bid.
The company is different to any other ASX-listed financial stocks, although is likely to be compared to Flexigroup. It'll take some educating investors and other stakeholders about the local mortgage market and the securitisation funding model.
Non-bank lenders such as Pepper account for only a small portion of the Australian residential mortgage-backed securities market. However, issuance has increased in the past two years.
Pepper's board and management team is expected to decide whether or not to pursue a float by the end of the year.
The mandates see Pepper join the IPO pipeline alongside the likes of MYOB, United Petroleum, Link Market Services, Costa Group, Amaysim and WiseTech Global.
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