Bluestone News

Bluestone Group owners to mull exit options, including IPO

June 16, 2017

Lending and loan servicing business Bluestone Group is gearing up for dual-track sale process over the next 12 months, amid favourable conditions for non-bank lenders.

Street Talk understands Bluestone's shareholders, which include private and institutional shareholders Macquarie Group and Lloyds Development Capital (LDC), were prompted to consider strategic options after inbound inquiries.

Sources said it was unclear whether an advisory firm was on deck to manage trade sale and initial public offering deliberations.

LDC is a mid-market private equity house which is owned by Lloyds Bank. It took a stake in Bluestone about three years ago, in a deal that saw Crescent ­Capital and the billionaire Liberman family sell out.

Bluestone is understood to have net assets of about $50 million in Australia, and expects net profit for this market of $10 million for fiscal 2018. Those numbers exclude offshore operations in markets including the UK and Ireland.

Interestingly, Bluestone's local rival and non-conforming lender Liberty Financial is also mulling strategic options, including a listing on the ASX boards.

Liberty has drafted in JPMorgan to help assess the merits of an IPO or finding a private investor.

Given the heated debate about prospects for the Australian housing market, interested parties and local fund managers will no doubt have plenty of questions to fire at Bluestone and Liberty.

Also, sale conditions have not been ideal in the trade space.

Last year, non-bank lender Firstmac shelved sale plans after Goldman Sachs unsuccessfully solicited interest for home loan magnate Kim Cannon's enterprise.

Non-bank lenders are, however, seeing a surge in demand this year as the major banks pull back from interest-only mortgages and lending to foreigners.

This is as a result of a clampdown being overseen by the prudential regulator.

It has also spurred private equity giants KKR & Co and Blackstone to separately look at setting up ventures to plug the gap in the local market.

Elsewhere in financial services, and as revealed by Street Talk, Baillieu Holst was in the market offering a 10 per cent stake in iSelect on Thursday afternoon.

Baillieu was seeking to sell shares on behalf of iSelect founder and former director Damien Waller.

The stock was being offered via a bookbuild with an underwritten floor price of $1.92.

Baillieu was calling for bids from $1.92 a share and up to $1.98.

The floor price represented a 5.4 per cent discount to the last close. The trade was expected to be worth about $45 million.

Authors: Sarah Thompson, Anthony Macdonald, Joyce Moullakis

Image provided by Paul Rovere.

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