Westpac sells asset finance subsidiary

Westpac Group has announced that it has entered into an agreement for the sale of Vendor Finance to Angle Finance.

Angle Finance is a division of Cerberus Capital Management LP, which also purchased equipment finance lender Axsesstoday for $260 million in September 2019.

Vendor Finance, which operates out of Westpac subsidiary Capital Finance Australia Ltd (CFAL), manages approximately $500 million in customer loans.

According to Westpac, the sale is expected to have a “negligible impact” on the group’s balance sheet and capital ratios, given the “relatively modest size of the portfolio”.

However, Westpac noted that it expects to realise a “small accounting loss” because the transaction is being structured with an initial payment upon completion and deferred consideration payable over the two-year period following completion of the sale.

The sale is expected to be completed by the end of April 2021.

Following the announcement, Jason Yetton, Westpac chief executive, specialist businesses, said the sale forms part of the group’s simplification strategy.

“The sale represents the first transaction of the group’s simplification initiatives and brings certainty for Vendor Finance customers and new opportunities for our people,” he said.

Westpac noted that it would continue to retain and manage the remaining CFAL Equipment Finance business in its business division.

[Related: Westpac reports 42% drop in mortgage deferrals]