Macquarie, NAB, Westpac swerve Investec auction

Posted by Anton Murray Consulting on 21 Feb, 2014

Sarah Thompson, Anthony MacDonald and Gretchen Friemann

Macquarie Group is no longer a frontrunner for Investec Australia’s $3 billion loan book and professional finance division, after dropping out before the second round of the auction.

It’s understood Macquarie has joined heavy-hitters Westpac Banking Corp and National Australia Bank on the sideline.

Westpac is still chewing through last year’s $1.45 billion acquisition of Lloyds Banking Group’s remaining Australian assets, while National Australia Bank’s NAB Health subsidiary, operator of Medfin Australia, was said to have felt there may have been a culture clash between the two firms. Interestingly, should NAB Health have been the successful acquirer, it would have been buying back its old management team which moved to Investec in 2003.

Perhaps some of the Big Four formed the view it may be better to fund whoever picks up the assets rather than buy it themselves.

As for who’s still in the Greenhill-advised sale process, ANZ Banking Group and Bank of Queensland are involved and have appointed external advisers. Up for grabs is the Investec loan book, an asset finance and leasing division and the professional finance unit which provides loans for doctors, accountants and dentists and is making about $50 million in pre-tax profit .

Final bids are due at the end of March. About five parties are looking at the package as a whole, while there are two or three outfits interested in parts of the business.

This latter group is said to include GE Capital.

There’s also offshore interest. However, it’s hard to pinpoint a logical US buyer despite the portfolio’s low credit risk.

While private equity should not be ruled out, JC Flowers has been touted as a prospective acquirer, a sponsor’s cost of funding is materially higher than the trade players.

Equally, no chief executive of a UK bank is going to tolerate capital intensive expansion in Australia after the experience of Lloyds and Bankwest, which was a wholly owned subsidiary of HBOS Plc until it was sold to CBA in 2008.

Sources suggested the likes of Citigroup and HSBC –firms which already have a presence in Australia – may run the ruler.

The Australian Financial Review

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