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The non-bank lender has priced a $723.3 million transaction to help it grow its asset finance business.
Pepper Money has priced its first asset-backed security transaction of 2023 — SPARKZ 6 — as it moves to bolster growth in its asset finance business.
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The transaction, its third public securitisation transaction this calendar year, was upsized from $620 million to $723 million. It is expected to settle on Thursday (18 May).
Once settled, Pepper will have raised $2.4 billion in the securitisation markets in the calendar year to date.
Speaking of the SPARKZ 6 transaction, Pepper Money’s CEO, Mario Rehayem, said the funds raised under the SPARKZ 6 transaction would give the non-bank lender “the funding headroom for further growth” and help Pepper “continue to deliver [its] mission of helping people succeed”.
Pepper Money’s Asset Finance business originated its first loan in 2015 and had more than $5 billion in assets under management as of the end of March 2023. Its portfolio comprises car receivables and other asset types such as marine and recreational equipment.
Its asset finance products are distributed via mortgage and finance brokers, online auto brokers, commercial and consumer brokers, car dealerships and original equipment manufacturers (OEM).
Mr Rehayem said: “Our SPARKZ 6 deal demonstrates strong, ongoing investor support for our asset finance business, and Pepper Money as a whole.
“Our growth to date is testament to our unique ability to leverage our innovative, purpose-built technology and specialist capabilities to provide the market with the right financing solution for their needs, combined with market-leading approval times.
“We continue to build out our offering and in February 2023 we moved to ‘real-time’ payments for asset finance. This is part of our ongoing support to our partners in delivering the best service and solution to their customers.”
He flagged that SPARKZ 6 represented Pepper’s sixth ABS since starting ABS issuances in 2019, bringing Pepper’s cumulative ABS raising to $4.0 billion.
National Australia Bank was the arranger of SPARKZ 6 and joint lead manager with Bank of America Securities, RBC Capital Markets, Société Générale and Westpac Banking Corporation.
MUFG Securities Americas Inc acted as co-manager, while KWM Melbourne acted as Pepper Money’s legal counsel.
Pepper’s asset finance book grows as mortgage lending slows
Pepper Money recently revealed that its asset finance applications have been rising.
Speaking at the lender’s AGM in April, Mr Rehayem revealed that asset finance applications had grown 19 per cent for the year to March, reaching a new record of around $500 million in applications in March 2023.
This takes the lender’s assets under management for asset finance to over $5 billion for the first time.
Mr Rehayem said: “The strength of our asset finance business is defined through our breadth of distribution, the ease of doing business with us given our purpose-built technology, and our position in EV [electronic vehicles] and novated leasing — has seen our applications grow 19 per cent for the year to March.”
[Related: Pepper prices inaugural asset finance securitisation]
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