US investor KKR looks to lucrative Australian property market with Pepper Group acquisition

By Addie Thomes

Money lending company Pepper Group has agreed to sell up to American investment firm KKR in a deal worth more than AU$650mn.

The US private equity giant is looking to move into the lucrative Australian real estate space, spurred by a property boom that has seen demand and prices rise, especially in cities such as Sydney.

Pepper Group, a mortgage provider, saw lending activity rise by more than a third during the course of 2016, while traditional banks credit grew by 6.5% due to greater concern over risk associated with mounting household debts.

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Pepper Group Chairman Seumas Dawes told Reuters: “We believe it represents a compelling opportunity for shareholders, allowing them to choose to either obtain liquidity for their shares at an attractive valuation or remain invested in the Pepper business.”

Australia’s mortgage industry is currently worth around AU$1.7trn, with many overseas companies looking to dig into the sector’s high profitability.

KKR clearly sees the potential in non-traditional financial companies driving this growth. Able to innovate and bring new products to market faster than large banks, companies drawing on fintech advances are drawing in more consumers looking for convenience and quick solutions.   

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