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ISCOVER
Staff Reporter
Pepper Australia has acquired a $250 million small balance commercial mortgage portfolio from Citigroup.
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The acquisition is part of Pepper’s strategic growth plans to extend its specialised lending services beyond residential home loan products.
This is Pepper’s first domestic acquisition of 2013, but comes on the back of an 18-month period that has seen the company acquire several whole loan portfolios and financial services businesses in Australia and Europe, facilitating its expansion into new asset classes and markets.
The small balance commercial loan portfolio acquired by Pepper includes loans to approximately 730 customer relationships with an average balance of around $345,000.
The vast bulk of the loan book is secured by residential and commercial properties located in New South Wales (mainly Sydney) and Victoria, with some exposure in Queensland, Western Australia, South Australia and Tasmania.
Pepper’s managing director and chief executive, Patrick Tuttle, is confident the acquisition will boost the group’s earnings and will provide a sound basis from which it can better assess the feasibility of commencing new Pepper-branded originations in the small balance commercial space in the near term, possibly within the next six to 12 months.
“A small balance commercial mortgage offering would complement our existing range of specialist residential mortgages, which have traditionally focused on providing competitive access to credit for self-employed and small business owners,” he said.
“The small business sector has largely been forgotten in the wake of the GFC, so Pepper is keen to expand its product offerings to this sector as we continue to experience new lending growth well ahead of system growth.”
