Currently, the business operates out of the Westpac subsidiary Capital Finance Australia
Australian bank and financial services provider Westpac has agreed to sell its Vendor Finance business to Angle Finance, a portfolio company of Cerberus Capital Management.
Westpac said that the business supports third parties to fund small ticket equipment finance loans for almost 42,000 Australian businesses.
The transaction is expected to be completed by the end of April 2021.
Specialist Businesses chief executive Jason Yetton said: “The sale represents the first transaction of the Group’s simplification initiatives and brings certainty for Vendor Finance customers and new opportunities for our people.”
Vendor Finance acquisition to result in transfer of $500m of customer loans to Angle Finance
Westpac said that the transaction is expected to have a minimum impact on its balance sheet and capital ratios, as the modest size of the portfolio.
Also, the deal is anticipated to result in a small accounting loss, as the transaction is structure with an initial payment on completion and overdue consideration payable over the two-year period after closing of the transaction.
In May, Westpac Banking has reported a 62% drop in its statutory net profit for the first half of 2020 that ended 31 March to AUD1.19bn ($770m), compared to AUD3.17bn ($2.04bn) made in the same six months of the previous year.
Vendor Finance is currently operated by the Westpac subsidiary Capital Finance Australia (CFAL), while Westpac would retain the rest of CFAL Equipment Finance business in its Business Division.
The transaction is anticipated to result in the transfer of approximately $500m of customer loans.
Angle Finance is a non-bank asset finance firm that offers equipment finance for transport, construction, materials handling and earthmoving equipment, for small and medium sized enterprises (SMEs). The company began its operations in Melbourne, in September 2019.