Pepper Money Limited (Pepper) (ASX: PPM) priced a $800 million auto asset-backed security (ABS) transaction under the Sparkz programme on 8 December 2021.
This is Pepper’s sixth public transaction for 2021 and sees Pepper having raised $4.8 billion in the securitisation markets this year. Funds raised under the Sparkz4 transaction will support the continued growth of the asset finance business.
Pepper’s asset finance portfolio comprises auto receivables and other asset types such as marine and recreational equipment, distributed via online auto brokers, commercial and consumer brokers, car dealerships, original equipment manufacturers (OEM) and mortgage brokers.
Commenting on the Sparkz4 transaction, Pepper Money’s CEO, Mario Rehayem, said:
“I am delighted to be rounding out the year with this ABS transaction. It signifies the strong growth we have experienced in our asset finance business this year. Importantly, it gives us the funding headroom for further growth and therefore the ability to help even more customers in 2022.
“The addressable market of the Australian asset finance market is valued at around $186 billion1. Pepper identified asset finance as an attractive growth opportunity in 2014. Since then, we have organically grown this business to over $3 billion of Assets Under Management, with $1.6 billion in originations this year for the 10 months to October. We are proud to be the leading financier of electric vehicles having funded over $200 million EV purchases since May 20192.
“We continue to see strong demand in the market for asset finance - in particular for cars, primary equipment and light commercial vehicles - and Sparkz4 positions us to continue to drive strong growth.”
Pepper’s Treasurer, Anthony Moir said “It was pleasing to end the year on a high note. This is our fourth ABS transaction since 2019 and we saw great support from a broad group of our investors. As always, we are excited to continue to see new investors participating in our funding platforms. We look forward to offering more investment opportunities to all interested investors in 2022.
We would like to thank our arranger and Joint Lead Manager National Australia Bank as well as well as our other Joint Lead Managers including Westpac Institutional Bank, Societe Generale, BofA Securities, RBC Capital Markets and MUFG Securities.”
The transaction will settle on 16 December 2021.
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1 Asset Finance addressable market: sum of commercial and consumer. Consumer – is as per new household loan commitments for purchase of road vehicles, other transport vehicles and equipment, New household loan commitments, ABS 5601.0 Lending Indicators Table 27, October 2020 –September 2021 (published November 2021). Assumes market size is approximately 4x lending commitments for last 12 months. Commercial – is as per new business loan commitments, finance lease and fixed term, purchase of vehicles, plant and equipment, ABS 5601.0 Table 29, 21 and 33, October 2020 –September 2021 (published November 2021). Assumes market size is approximately 4x lending commitments for last 12 months.
2 Pepper Internal. Originations: May 2019 to October 2021
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