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Pepper enters Japanese market

The non-bank lender is set to enter into the Japanese loan market after acquiring a Japanese loan services company.

Global loan servicing and loan company Pepper Group has announced that it will enter the Japanese financial services market, after acquiring 100 per cent of Millennium Holdings KK, the holding company of Millennium Corporation (Millennium).

Millennium, which was first established in 2000, holds a loan servicing licence granted by the Minister of Justice of Japan and offers loan servicing to both domestic and international clients.

Pepper’s acquisition aims to expand Millennium’s presence in the Japanese non-performing loan (NPL) market as it “leverag[es] Pepper’s expertise and experience gained over the last two decades in the Australian and various European and Asian loan servicing markets”.

While the terms of the transaction were not disclosed, Pepper Group has said that the existing management team at Millennium will remain under the deal and will be responsible for expanding the domestic and international client base beyond its current size.

It added that, in the future, Pepper intends to offer various financial products and services in the Japanese market.

Speaking of the transaction, Pepper said that its entry into the Japanese financial services signifies “the importance of Japan as part of the company’s broader strategic focus on Asia”.

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Mike Culhane, the global CEO of Pepper, commented: “We have been looking for opportunities to expand our successful asset servicing business model into Japan for some time and believe now is the right time to acquire a quality business like Millennium and enter the Japanese market.”

He added that the group “will focus on making an impact on the Japanese asset servicing and mortgage financing market in Japan”.

“We expect the Japanese NPL market to see increased and sustained activity levels in the coming years, due to several factors, including regulatory focus, regional bank consolidation and the economic conditions as a result of COVID-19,” Mr Culhane revealed.

“This acquisition allows us to combine our existing global expertise with a strong domestic platform to attract new business and build a strong portfolio servicing loans on behalf of others.

“We view this as an important first step into the Japanese financial services market,” he concluded.

The president of Millennium, Hiroshi Kenmoto, also commented, stating: “Millennium is delighted to join with Pepper as we continue to expand our opportunities with domestic and international clients.

“We look forward to working together closely to unlock new areas of opportunity with Pepper’s support as well as to continue to provide high-quality services our existing clients already enjoy today,” he added.

Pepper Group, which is majority owned by global investment firm KKR, was originally founded in Australia and has since expanded its reach into New Zealand, the UK, Ireland and Spain.

More recently, the group has been pursuing growth across Asia, having entered the Chinese and Indian markets for loan servicing, and building up its South Korean lending operations.

Pepper Group is the latest lender to break into the Japanese market, after Resimac entered the Japanese capital markets with a $1-billion RMBS deal last month. Likewise, Japanese financial services companies have also been looking to Australia, with Crowd Bank (a Japanese crowdfunding platform), recently entering into the Australian market after becoming an investor in marketplace lender Zagga.

[Related: Non-bank prices $615.9m asset finance transaction]

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