Macquarie Group Ltd. (MQG), Australia’s largest investment bank, bid for Lloyds Banking Group Plc (LLOY)’s Australian assets, said a person with knowledge of the matter, who asked not to be named as the process is confidential.
A consortium led by Pepper Australia Pty, a non-bank lender, also made a bid, another person said. Final binding offers for the close to A$9 billion ($8.4 billion) in assets were due yesterday, people with knowledge of the transaction said last month. The sale includes Lloyds’s Capital Finance unit and corporate loans valued at more than A$2 billion, they said.
Lloyds Chief Executive Officer Antonio Horta-Osorio, 49, is strengthening the firm’s balance sheet by selling assets and cutting costs following the bank’s 20 billion-pound ($32 billion) bailout in 2008. The British government last month started selling its 39 percent stake in the country’s largest mortgage lender as part of a move to full private ownership.
“For the last three or four years Macquarie has been looking to build its leasing portfolio,” said Angus Gluskie, who helps oversee about A$500 million in assets, including Macquarie shares, as chief investment officer at White Funds Management Pty in Sydney. “It is an area that has given them good returns.”
Lisa Jamieson, a Sydney-based spokeswoman for Macquarie, declined to comment, as did Lynne Machin, a Lloyds spokeswoman. Goldman Sachs Group Inc. (GS:US) is advising Lloyds on the sale.
Shares of Macquarie rose 0.2 percent to A$47.99 at the close of Sydney trading and have jumped 35 percent this year, compared with the benchmark S&P/ASX 200 index’s 12 percent gain.
Chief Executive Officer Nicholas Moore has expanded Macquarie’s annuity-style businesses such as lending, leasing and fund management to offset earnings volatility at its trading and investment banking units.
It bought a A$1 billion car loan portfolio from the Australian unit of GMAC Inc. and a 53-aircraft leasing portfolio from International Lease Finance Corp. for A$2 billion in April 2010. Its corporate and asset finance division had A$22.4 billion of loans and assets under management as of March 31, according to a company filing.
Initial offers valued Lloyds’s commercial-lending and asset-finance units in Australia at more than A$1 billion, the Wall Street Journal reported on Sept. 25.
Pepper Australia’s bid is being backed by Bank of America Corp. (BAC:US) and General Electric Co., the person said. Reuters reported the consortium’s offer earlier today. Pepper declined to comment, according to a statement e-mailed by Anna Frilingos, an external communications adviser at DEC Public Relations.
Westpac Banking Corp. (WBC) was preparing a final bid for the assets, two people with knowledge of the matter said last week. Australia & New Zealand Banking Group Ltd. (ANZ) dropped out of the race, people said. Westpac’s Sydney-based spokeswoman Supreet Thomas declined to comment.
Lloyds International Pty, the London-based lender’s Australian unit, reported a loss of A$148.3 million in 2012, after a shortfall of A$1.2 billion the previous year, according to company filings. The division reduced assets by 24 percent to A$12.2 billion last year, according to the documents.
Macquarie is also considering a bid for Lloyds’s Scottish Widows Investment Partnership, the asset-management arm of Scottish Widows, two people with knowledge of the negotiations said last week.
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