Deal aligns with strategy to grow 'capital-light servicing business'
ASX-listed non-bank lender Pepper Money has confirmed an agreement to acquire the RAMS portfolio from Westpac in conjunction with a consortium including private equity group KKR.
Under chief executive Mario Rehayem (pictured), Pepper Money initially revealed talks of negotiations in late October.
Pepper Money said the deal aligns with its strategy “to grow its capital-light servicing business, which provides annuity-style earnings, operational scale and diversification benefits”.
In an ASX announcement, Pepper Money said: “Completion of the transaction is subject to satisfaction of customary conditions precedent, including Foreign Investment Review Board approval and clearance from the Australian Competition and Consumer Commission.
“Subject to satisfaction of the conditions precedent, completion of the transaction is targeted for the third quarter of 2026. KKR is making its investment in the portfolio from managed credit funds and accounts as part of the firm's Asset-Based Finance strategy.”
Annual results published by Westpac today gave an insight into the dragging effects the RAMS portfolio has had on the banking giant.
RAMS mortgages declined by 28% to $21.4 billion over the year due to run off.
Westpac Australia’s mortgage book (excluding RAMS) grew by 5% to $497 billion, but taking the RAMS portfolio into account, home loan growth was limited to just 3%.
Westpac closed the RAMS portfolio to new applications in August 2024 following allegations of compliance failings made by the Australian Securities and Exchange Commission (ASIC).
Westpac received a $20 million fine by the Federal Court in October after determining that RAMS breached the Credit Act by engaging with unlicensed referrers, lacking sufficient arrangements to manage conflicts of interest, failing to properly supervise its representatives, and not ensuring that its credit activities were conducted efficiently, honestly and fairly.
