The sale of Pepper Group’s European loan servicing business (PES) to Link Group will not proceed, it has been announced today.
The sale, originally announced in January 2020, was supposed to be for an upfront cash payment of €165m but it will not go ahead due to Link Group’s own decision.
Link, based in Australia, exercised its right not to complete the deal, after a sale agreement date expired on 31 January and no extension was sought. Link had also been a takeover target itself and is in the process of selling one of its own businesses.
According to Pepper, on an analyst call last night, Link highlighted that the world has changed and that it can now preserve capital. Link also stated on the call that the regulatory process has been challenging and that cancelling the transaction aligns with its "balance sheet management agenda".
In a statement posted on the Australia Securities Exchange, Link Group chief executive Vivek Bhatia said: “The Link Group business is resilient with strong foundations. We have a clear strategic focus to simplify the business, deliver the global transformation programme and maintain a strong balance sheet. As a result of the termination of the PES transaction, we will preserve the capital for future growth opportunities."
Pepper has no immediate plans to re-instigate the sale process of PES. Mike Culhane, chief executive of Pepper Group, said: “PES had its strongest year ever in 2020. Against this backdrop, and having assessed the options, the board believes focussing on the ongoing growth of the business in the near future is in the best interest of the business, its people, customers or shareholders.”
In Q3 and Q4 of 2020, PES took on 12 new portfolio mandates, with eight new clients adding over €5bn to its assets under management.