New Zealand's biggest consumer finance company, GE Money, has been sold as part of a massive deal valued at A$8.2 billion to a consortium comprising of global investors Värde Partners, private equity group KKR, and Deutsche Bank.
The Australasian consumer operations of GE Capital, part of US giant General Electric, were put on the block last September.
At that time a spokeswoman for GE Capital NZ told interest.co.nz: "The decision to explore options to sell the consumer business fits with our overall strategy to be the world’s premier infrastructure technology company and the leading specialty finance provider to the mid-market. GE is committed to this growth strategy in Australia and New Zealand and will continue to invest here."
GE Money has about 450,000 customers, and works through partnerships with the likes of Harvey Norman and Michael Hill.
It has a partnership with Kiwibank, with the state owned bank's website saying; "Personal loans and car loans are provided by GE Finance and Insurance trading as GE Money. Kiwibank may receive a commission for referring a personal loan or car loan to GE Money. GE Money’s lending criteria, terms and conditions, and fees apply."
A Kiwibank spokesman said it was too soon to say whether the sale of GE Money would mean any changes for the relationship.
"Kiwibank has only just been notified of the change in ownership and is not yet in a position to respond," the Kiwibank spokesman told interest.co.nz.
The NZ GE business also includes the GEM Visa card, which has about 158,000 cardholders, and the Countdown OneCard Visa credit card that has about 10,000 customers.
Varde's previous NZ forays
Varde Partners is perhaps the most interesting of the three acquirers of GE Money. Varde takes its name from the Swedish word for value and is likely to provide funding for the acquired business. Its previous forays to New Zealand include backing Bluestone Group’s $45 million post global financial crisis bailout of Irongate Properties, and Bluestone's purchase of finance receivables ledgers from Provincial Finance's receiver PricewaterhouseCoopers in 2008.
And in 2010 Bluestone’s CEO Peter McGuinness told interest.co.nz his company had up to NZ$500 million to spend on distressed New Zealand property assets, with this money from the Minneapolis-based Varde Partners.
KKR, meanwhile is Kohlberg Kravis Roberts, made famous by the book Barbarians at the Gate: The rise and fall of RJR Nabisco, which is about the leveraged buyout of RJR Nabisco.
Commenting on the sale, GE Capital Australia & New Zealand chief executive Duncan Berry said his company was "delighted" to have done a deal with "a well-respected consortium of businesses".
"Consumer finance has been a great business for GE and is well positioned for further growth."
He said GE Capital remained committed to a growth strategy for the GE Capital commercial finance in the Australasian region "and will continue to build our mid-market lending portfolio and leasing businesses here".
The A$8.2 billion figure provided for the size of the deal is an enterprise value figure meaning it includes debt.
This was the full statement put out to announce the transaction:
Värde Partners ("Värde"), a global alternative investment firm, KKR, a leading global investment firm, and Deutsche Bank have signed an agreement for the purchase of GE Capital's Australia and New Zealand Consumer Lending Business ("the Company") at an enterprise value of A$ 8.2 billion.
The Company is a leading financial services provider offering a range of services and products including personal loans, credit cards and interest free retail finance. It has more than 3 million customers and is a long-standing partner to many of the major retailers in Australia & New Zealand. All of these products and services will remain under the Company's new ownership.
Commenting on the transaction, GE Capital Australia & New Zealand Chief Executive Officer Duncan Berry said: "We are delighted to have signed this agreement with a well-respected consortium of businesses. Consumer finance has been a great business for GE and is well positioned for further growth."
Duncan Berry added, "We remain committed to our growth strategy for GE Capital commercial finance in the region and will continue to build our mid-market lending portfolio and leasing businesses here."
"GE has a strong platform for growth in our industrial businesses in Australia & New Zealand," said Geoff Culbert, President and CEO, GE Australia & New Zealand. "This transaction allows us to focus on our strategy to be the world's premier infrastructure technology company with a specialty commercial financial services business. We will continue to work with our customers in key industries including oil and gas, energy, healthcare, aviation and mining."
Managing Director of GE Capital's consumer business, Rachel Cobb, said: "This is an exciting opportunity for us to grow our consumer finance business further and we will continue to provide best-in-class service and solutions for our customers and partners."
Commenting on the agreement, Joseph Y. Bae, Managing Partner for KKR Asia, said: "KKR is honored to be an owner of such a world-class franchise. We will leverage KKR's global and regional expertise and platform to create an exciting future for this business."
"GE Capital is one the most respected providers of consumer finance in Australasia. They are led by a strong management team with an outstanding track record of partnering with leading retailers. We are delighted to have the opportunity to partner with Värde Partners and Deutsche Bank to support both existing and new customers and product growth in the years to come," said Ed Bostock, Director, KKR Australia.
"Värde Partners believes this partnership will provide a platform for growth in the dynamic consumer finance market in Australia and New Zealand. It is a natural extension of our deep expertise in specialty consumer finance and a great fit for us" said George Hicks, a founding partner and Co-CEO of Värde Partners.
"We are delighted to be part of one of the largest private equity transactions ever in Australia and New Zealand with our world-class partners, KKR and Deutsche Bank. This investment demonstrates Värde's continued commitment to our Asia-Pacific business, and we look forward to working with the management team to grow the business and strengthen its retail partnerships," said Ali Haroon, Värde Partners' lead partner in the Asia Pacific Region.
Deutsche Bank Australia and New Zealand Chief Executive James McMurdo said: "Deutsche Bank is delighted to be partnering with KKR and Värde in the acquisition of this high quality, market-leading business in Australia and New Zealand."
Advisers to GE are Credit Suisse and Morgan Stanley.
Advisers to the acquiring consortium are Bank of America Merrill Lynch, Moelis & Company and Citi.
The transaction is subject to customary regulatory approvals. Further terms of the transaction are not being disclosed.
KKR is a leading global investment firm that manages investments across multiple asset classes including private equity, energy, infrastructure, real estate, credit and hedge funds. KKR aims to generate attractive investment returns by following a patient and disciplined investment approach, employing world‐class people, and driving growth and value creation at the asset level. KKR invests its own capital alongside its partners' capital and brings opportunities to others through its capital markets business. References to KKR's investments may include the activities of its sponsored funds. For additional information about KKR & Co. L.P. (NYSE:KKR), please visit KKR's website at www.kkr.com.
About Värde Partners
Värde Partners is a $10 billion global alternative investment firm that employs a credit-oriented, value-based approach to investing across a broad array of geographies, segments and asset types, including real estate, corporate credit, residential mortgages, specialty finance, transportation and infrastructure. The Firm provides the highest level of service to a select group of sophisticated global investors including foundations and endowments, pension plans, insurance companies, other institutional investors and private clients. Founded in 1993, Värde employs 200 people with offices in Minneapolis, London and Singapore.
About Deutsche Bank
Deutsche Bank is a leading client-centric global universal bank serving 28 million clients worldwide. Deutsche Bank provides commercial and investment banking, retail banking, transaction banking and asset and wealth management products and services to corporations, governments, institutional investors, small and medium-sized businesses, and private individuals. Deutsche Bank is Germany's leading bank, with a strong position in Europe and a significant presence in the Americas and Asia Pacific.