Pepper sells $400m of home loans

Non-bank mortgage provider Pepper Group Limited has announced that it has agreed contractual terms on a whole loan sale transaction comprising a $400 million portfolio of residential mortgage loans.

The agreement is the second $400 million whole loan sale announced by Pepper this year, which sees economic ownership of the loans transfer from Pepper to the buyer.

When the company announced its first whole loan sale in March of this year, it said that it expected to “execute further whole loan sales throughout the year” (subject to “acceptable terms and conditions”) as this is an “important source of funding” for Pepper, in addition to regular issuances in the Residential Mortgage Backed Securities (RMBS) markets.

Commenting on the transaction, Pepper’s Co-Group CEO, Patrick Tuttle, said: “Pepper’s ability to complete a second whole loan sale inside of 12 months is testament to the platform we have built over the past few years, the quality of our existing loan book and rate of origination we are experiencing in Australia.”

Mike Culhane, Pepper’s Co-Group CEO added: “Pepper proactively manages its funding programme to ensure adequate headroom is maintained across all our warehouses in a diversified way. The use of whole loan sales in addition to our regular securitisations programs is demonstration of this diversity.”

The sale marks the latest deal that the non-bank lender has made in recent weeks, following its announcement that it has entered into a joint venture with Spanish banking giant Banco Popular.

The 50-50 joint venture in the Spanish unsecured consumer finance market will see Pepper Group and Banco Popular form an alliance to pursue new international business opportunities in Europe, Asia and the Americas focusing on consumer finance.

As part of the agreement, the Spanish lender will provide a committed, five-year, $100 million equity funding facility to support future growth. 

The combined business will have a total loan book outstanding of approximately $404 million as of 31 December 2015, making it the fifth largest player in the Spanish PoS finance market and will have access to Banco Popular’s customer base.

[Related: Pepper completes $300m RMBS issue]

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Annie Kane

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