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Citi acquires Coles credit card business

Citi acquires Coles credit card business

David Eliakim

Two firms have advised on the acquisition of Coles’ major credit card loan book by US financial giant Citi.

Firms: King & Wood Mallesons (Citi), Herbert Smith Freehills (Coles Financial Services)

Deal: Citi has signed a 10-year deal to distribute Wesfarmers’ Coles-branded credit cards

Value: Undisclosed; portfolio gross receivables estimated at $880 million

Area: M&A

Key Players: Leading the KWM advisory team were partners Katherine Forrest and David Eliakim, who were assisted by Shabarika Ajitkumar, Jennifer Cheung and Rebecca Coventry.

Katrina Parkyn, Tim Sherman, Stuart Courtney and Joseph Power provided specialist stamp duty and tax advice. Michael Swinson and Kathryn Purcell-Hennessy assisted the team in IP; Karen Coleman and Veronica Oh assisted in contractual enforceability; Wayne Leach and Jodi Gray assisted in competition; Paul Smith and Daniel Bragg assisted the team in securitisation; and Malcolm Brennan and Alexandra Smith assisted with the Foreign Investment Review Board.

Brendan Earle led the Herbert Smith Freehills advisory team, supported by senior associates Nick Gowans, Kwok Tang, Hong-Viet Nguyen and Adam Charles.

Deal significance: The 10-year agreement means Citi will manage the operations of the Coles credit card portfolio, acquiring about $880 million in existing credit card receivables. Coles, a Wesfarmers subsidiary, is set to receive a share of the risk-adjusted revenue under the deal.

“The transaction is unique in this market as it involves the sale of a credit card loan book by an owner while the book is being serviced, and will continue to be serviced for a period, by a third-party operator,” Ms Forrest said.

Mr Eliakim commented on the significance of the deal, saying it was a testament to Citi’s strength in the credit card market.

“Citi is a leading player in the Australian credit card market and its ability to secure distribution arrangements with iconic Australian brands such as Coles is a tribute to the strength of [its] growing platform,” he said in a statement.

 

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