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) 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) 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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