Private equity firm Brookfield Business Partners (BBU) and Brookfield Business Corp. have agreed to acquire Australian non-bank lender and asset manager, La Trobe Financial, for a total consideration of $1.1 billion.
Impressively, La Trobe oversees fixed income credit funds for more than 50,000 qualified retail investors. It also finances loans to high-quality borrowers in the Australian real estate credit market, and has over A$13 billion in assets under management (AUM).
Management Weighs In
The Managing Partner of Brookfield Business Partners, Len Chersky, commented, “We are pleased to expand our presence in Australia with the acquisition of La Trobe Financial, one of Australia’s leading mortgage originators and asset managers. We intend to invest in La Trobe Financial to support its growth and look forward to building on the business’ foundation of continuous growth and profitability.”
Key Highlights
The $1.1 billion transaction amount also includes a contingent payment, which is linked to the underlying business notching certain performance milestones. Brookfield is funding its initial investment via $765 million in equity. Of this, $250 million will be invested by Brookfield Business Partners and the rest will come from institutional partners. The transaction is expected to close in Q2 2022.
Notably, the transaction offers potential for value creation on the back of La Trobe’s large distribution presence and recurring investor inflows, which further allow for scale-up and diversification.
Analysts’ Take
Recently, RBC Capital analyst Geoffrey Kwan reiterated a Buy rating on the stock alongside a price target of $41. Overall, the Street has a Strong Buy Consensus rating on Brookfield based on 4 unanimous Buys. The average Brookfield Business Partners price target of $49.75 implies a potential upside of 75.7% for the stock.
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