Pepper Money to buy HSBC’s mortgage portfolio

AUCKLAND, NZ: Pepper Money Limited (ASX: PPM), a leading provider of alternative lending solutions, has announced that it has signed a binding agreement to buy the prime residential mortgage portfolio of The Hongkong and Shanghai Banking Corporation Limited (HSBC) in New Zealand.

The deal is expected to close in late November 2023, subject to approval from the New Zealand Overseas Investment Office. Pepper Money and HSBC will work together to ensure a smooth transition for the existing customers.

The mortgage portfolio that Pepper Money is acquiring is expected to have an outstanding balance of about NZ$1.4 billion at completion, adding more scale to Pepper Money’s existing home loan business in New Zealand. As of 30 June 2023, Pepper Money had Assets Under Management of A$18.9 billion.

Pepper Money will fund the transaction with a combination of senior and mezzanine funding, and its own first loss equity. The portfolio being acquired is a prime, seasoned and well performing portfolio, and the level of first loss required reflects this.

Pepper Money has been operating in New Zealand since 2011, when it bought GE Capital’s Australian and New Zealand Home Lending business. Since then, Pepper Money has expanded its presence in this market with the establishment of a full-service mortgage platform and the nationwide launch of a full range of residential home loans (Prime, Near Prime and Specialist loans) in 2019.

Pepper Money’s CEO, Mario Rehayem, said “We are pleased to announce our agreement to buy HSBC’s NZ$1.4 billion mortgage portfolio, which is a further step in our growth strategy. It shows our ongoing diversification of our revenue streams. Pepper Money has a strong track record of acquiring and managing loan portfolios, over 23+ years, and this acquisition will help us build more scale in New Zealand, a market that we know well and have been serving since 2011.”

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