Purchase of £1.4bn UK loan portfolio is part of wider European push
US giant GE Capital intends to become “a debt powerhouse in Europe” after announcing a definitive agreement to acquire Deutsche Postbank’s UK lending book.
The deal, announced last week, is subject to regulatory approval but is expected to close by 20 December, when Deutsche Postbank’s staff will find out if they are keeping their jobs.
GE Capital Real Estate will buy the £1.4bn, mainly UK loan portfolio, which includes 55 loans to about 40 borrowers, at a small discount.
Most of the loans, from a range of borrowers including wealthy private investors and quoted property companies, are performing.
GE is exiting equity property holdings to focus on its lending business, which it relaunched in Europe last year.
Ellen Brunsberg, managing director of GE Capital Real Estate UK, said the Postbank acquisition was “an excellent first step to building client relationships and credibility in the market.
“In 2013 we have made close to $1bn of direct loans by organic growth and with this $2.1bn of acquired mortgages we have $3bn. By 2015 we aim to have a $5bn UK loan book, both by organic growth and acquisitions. We aim to be a debt powerhouse in Europe.”
Brunsberg, who spent 17 years at Morgan Stanley, said most of the Postbank loans acquired were high quality, well performing and with low loan-to-value ratios, many with near-term loan expirations with the potential for refinancing.
“GE Capital is the largest mid-market lender in the world and this is a good fit for us,” she said.
GE Capital believes there will be more European loan book disposals but Brunsberg said she expected to be “financing their purchasers”, rather than buying the loans.
The US group has ambitions to expand its European lending business. French and German operations “are in the process of being set up or are set up”, Brunsberg said.
Deutsche Postbank’s owner, Deutsche Bank, put the UK loan portfolio up for sale last May.