By Swati Pandey and Sharon Klyne
SYDNEY (Reuters) - A group comprising KKR & Co (N:KKR), Varde Partners and Deutsche Bank (DE:DBKGn) are looking to securitize about A$7 billion ($5.33 billion) of debt they acquired from a unit of GE (N:GE), three sources with knowledge of the matter said.
The consortium said on Sunday that it will acquire GE Capital's Australian and New Zealand consumer lending arm, marking Australia's biggest inbound takeover of a finance company and the second-largest takeover by an offshore private equity firm.
The consortium agreed to acquire the GE unit for an enterprise value of A$8.2 billion, including the company's existing debt that will now be securitized, said the sources, who requested anonymity as they were not authorized to speak on the record.
The planned A$7 billion securitization will be led by Commonwealth Bank of Australia (AX:CBA), National Australia Bank (AX:NAB) and Westpac (AX:WBC), said two other sources involved in the debt negotiations.
The consortium is paying close to A$1.2 billion for the equity portion, which will be roughly equally funded by the three partners, one of the three sources said.
KKR did not respond to an email request seeking comment, while Varde Partners and Deutsche Bank declined to comment.
GE is seeking to reduce its exposure to GE Capital's credit business, which hurt the company during the 2008 financial crisis.
It hired investment banks Credit Suisse (SIX:CSGN) and Morgan Stanley (NYSE:MS) to run an auction for its GE Money, which offers personal loans, car loans, credit cards and personal insurance to its more than 3 million customers in Australia and New Zealand.
The smaller GE Capital that remains will focus on lending in sectors that complement GE's industrial businesses, such as aviation and energy, as well as to middle-market businesses and in commercial real estate.
Other bidders who lost out in the race included private equity giant TPG [TPG.UL], Singapore's GIC (GIC.UL), Macquarie Group (AX:MQG) and Pepper Australia.
($1 = 1.3132 Australian dollars)