Brookfield buys Australia non-bank lender for $1.1b
Brookfield Asset Management has agreed to acquire Australian non-bank lender and asset manager La Trobe Financial for about USD 1.1bn, facilitating an exit for The Blackstone Group.
Brookfield is investing via its flagship private equity vehicle, Brookfield Business Partners, which will provide USD 250m of a USD 765m initial equity payment. The balance will come from unnamed institutional partners, and a portion of Brookfield’s commitment may be syndicated to other investors.
The transaction is subject to customary regulatory approvals, including approval by Australia’s Foreign Investment Review Board. Closing is expected in the second quarter of 2022. The target company was reportedly considering a sale or IPO last year that would have valued it at more than AUD 2bn (USD 1.5bn).
Founded in 1952, La Trobe manages fixed income credit funds on behalf of more than 50,000 qualified retail investors, primarily in residential property-backed loans. It also has a substantial presence in Australia’s real estate credit market, where it finances loans to high-quality borrowers. Assets under management (AUM) stand at more than USD 13bn.
Brookfield said it was attracted by a 70-year track record that has proven resilient to economic and housing cycles. It noted that La Trobe’s model provided a structural capital advantage in servicing borrowers such as business owners, recent immigrants, and others who require specialised underwriting expertise. The plan is to scale and diversify the product platform.
La Trobe’s AUM is said to have more than tripled since Blackstone agreed to acquire 80% of the company for an undisclosed sum in 2017. Blackstone’s investment – completed two years later – represented its first move into Australia’s small business mortgage lending space.
Blackstone’s investment was seen as part of an attempt to manage an overheating in Australia’s housing market by encouraging small businesses to seek non-bank loans. Private equity interest in this space has since shifted to opportunities related to the country’s post-pandemic recovery. In some cases, businesses experiencing COVID-19 stress are seeking private credit to maximize a bounce from a return to normalcy rather than to stay afloat.
“We are pleased to expand our presence in Australia with the acquisition of La Trobe Financial, one of Australia’s leading mortgage originators and asset managers,” Len Chersky, a managing partner at Brookfield Business Partners, said in a statement. “We intend to invest in La Trobe Financial to support its growth and look forward to building on the business’ foundation of continuous growth and profitability.”
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