Firms: Herbert Smith Freehills (Pepper Australia Pty Limited); King & Wood Mallesons (Citi); Ashurst (Westpac); Allens (Goldman Sachs); Corrs Chambers Westgarth (Permanent Custodians)
Deal: Pepper’s acquisition and financing of a small balance commercial mortgage loan portfolio from Citigroup Pty Limited
Value: $250 million
Key players: The HSF team was led by partner Mark Crean (pictured) with support from senior associates Mark Currell and Cameron Mitcham
Deal significance: This is Pepper’s first domestic acquisition of 2013, but comes on the back of an 18-month period that has seen the company acquire several whole-loan portfolios and financial services businesses in Australia and Europe.
The small balance commercial loan portfolio acquired by Pepper includes loans to approximately 730 customer relationships with an average balance of around $345,000. The vast bulk of the loan book is secured by residential and commercial properties located in New South Wales (mainly Sydney) and Victoria, with some exposures in Queensland, Western Australia, South Australia and Tasmania.
The financing was provided on a secured basis by Australian and international banks. The acquisition enables Pepper to diversify and expand its capabilities into the commercial real estate market while allowing it to build on its servicing and lending platform to small businesses and the self-employed.