Lloyds Sale of A$9 Billion Aussie Unit to Get at Least Four Bids

Bidders including Westpac Banking Corp., Macquarie Group Ltd., Pepper Australia Pty and Australia & New Zealand Banking Group Ltd. are preparing final binding offers for Lloyds Banking Group Plc’s Australian assets, according to people familiar with the matter.

The face value of assets in the transaction, known as “Project Carey,” is close to A$9 billion ($8.6 billion) and bids are due Sept. 30, according to the 15 people, who asked not to be identified because the details are confidential. The sale includes Lloyds’ Capital Finance unit and a portfolio of over 30 corporate loans valued at more than A$2 billion, lent to companies including Telstra Corp Ltd., Arrium Ltd. and WICET Holdings Pty, the people said.

Britain’s biggest mortgage lender, part-owned by the U.K. government, is off-loading assets it no longer considers essential as it shrinks its balance sheet after a government bailout in 2008. The U.K. this week started to sell its 39 percent stake in the lender as part of a move to full private ownership. European banks are bolstering their balance sheets via asset sales as they try to meet stricter capital rules.

Goldman Sachs Group Inc. is advising Lloyds on the sale, with senior management from Credit Suisse Group also assisting the London-based bank. Lynne Machin, Lloyds’ Sydney-based spokeswoman, didn’t return a call or reply to an e-mail seeking comment yesterday. A spokeswoman for Credit Suisse declined to comment, while a Goldman Sachs spokeswoman wasn’t immediately available yesterday.

Westpac, Macquarie

Westpac, Australia’s third-largest bank by assets, is planning to submit a bid for the assets, advised by UBS AG and PricewaterhouseCoopers LLP, the people said. Macquarie is also expected to table an offer, while ANZ is being advised on its bid by Deutsche Bank AG, they said.

Lloyds’ Capital Finance unit, which provides retail, equipment and commercial financing services, has more than A$6 billion in assets and equity of more than A$2 billion, a person familiar with the matter said in July. The business on sale as part of Project Carey has about 700 employees, the people said yesterday.

Sydney-based Pepper, a non-bank lender, is planning to bid alongside Bank of America Corp. and U.S. financier General Electric Co., the people said. Bank of America is advising on that bid and may acquire the corporate loans if it succeeds, said the people. General Electric is providing most of the Capital Finance funding, they said. Other parties have been engaged by the Pepper-led group to take over remaining assets if the bid is successful.

Citigroup Inc. and other investors have offered to help fund Macquarie’s bid, according to the people familiar. Bank of America has also approached Macquarie, as well as Westpac, to potentially back either of those bids, they said.

Pepper Finance

Australia’s two other largest banks aren’t expected to bid, said the people. Commonwealth Bank of Australia has instead offered to help finance the Pepper-led and Macquarie offers, while National Australia Bank Ltd. is also negotiating finance arrangements with Pepper, they said. Melbourne-based NAB tabled an initial bid, other people said in August.

Lloyds International Pty, the lender’s Australian unit, reported a loss of A$148.3 million in 2012, narrowing from a shortfall of A$1.2 billion the previous year, according to Australian Securities & Investments Commission filings. The division reduced assets by 24 percent to A$12.2 billion last year, according to the documents.


A trust managed by Sankaty Advisors LLC agreed to buy a A$371 million portfolio of loan assets from Lloyds last month. Lloyds also sold some distressed corporate loans to investors backed by KKR & Co. in November, and 809 million pounds ($1.3 billion) of real estate loans to a joint venture between Morgan Stanley and Blackstone Group LP in June.

Paul Marriage, a Sydney-based spokesman for Westpac, declined to comment and Natalie Payne, Pepper Australia’s external communications adviser, wasn’t available to comment when contacted by phone yesterday.

A Macquarie spokeswoman wasn’t immediately available yesterday and ANZ spokesman Stephen Ries declined to comment. Spokespeople for Credit Suisse, PwC, UBS, CBA, Bank of America, NAB, Citigroup, Deutsche Bank, GE and Goldman Sachs declined or weren’t immediately available yesterday to comment.

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