Several factors made this a "significant deal in the New Zealand mortgage loan market”
Chapman Tripp has advised Pepper Money Limited on its entrance into a binding agreement to acquire HSBC NZ’s prime residential mortgage portfolio in New Zealand for about $1.4bn.
“The sale of a domestic loan portfolio of this size, in the context of a market exit, makes it a significant deal in the New Zealand mortgage loan market,” the firm said.
Pepper Money CEO Mario Rehayem explained in a September press release that the acquisition would “see the business continue to build scale in New Zealand” and is “a testament to the ongoing diversification of Pepper Money’s revenue streams.”
Senior and mezzanine funding will be applied to finance this transaction; Pepper Money will contribute the first loss equity. According to the company, this is akin to its funding approach for loan origination activity.
The transaction is projected to reach completion by late November, pending approval from the New Zealand Overseas Investment Office.
The team from Chapman Tripp was led by corporate partner Alex Franks and finance partner Luke Ford, who worked with partners Bevan Miles and Kelly McFadzien. Further support was provided by Emma Bowman, Tom van Schaik, Conor Tinker, and Grayson Hardy.
King & Wood Mallesons represented Pepper Money in relation to the financing of the transaction, while Norton Rose Fulbright and Bell Gully acted for HSBC.
The announcement of the agreement comes in the wake of HSBC announcing in June that it was winding down its wealth and personal banking business in New Zealand.
