UDC Sale Update

Media reports say four parties are competing to buy ANZ’s UDC Finance operation, with final bids due within six to eight weeks. Those four are understood to be Cerberus Capital Management, Apollo Global Management, Heartland Bank and US-based private equity firm TPG Capital.

Bridget Carter, editor of The Australian newspaper’s DataRoom, says some believe that Cerberus is the most promising contender, given its strong experience and expertise in the space, in a process that has attracted predominantly private equity.

ANZ has been trying to sell UDC for three years now, with its initial attempts thwarted when the Overseas Investment Office blocked the deal for China’s HNA to buy UDC Finance for $628 million in 2017.

Nevertheless, through all the drama, UDC has remained profitable. According to Interest.co.nz, in the year to September 2019 it reported a $4.4 million, or seven percent, rise in annual net profit after tax to a record high $69.7 million.

UDC remains an important part of the New Zealand asset and vehicle finance market, but any change in ownership will create change in areas such as strategic direction, how the book is funded, employee culture, return on equity expectations, and appetite for risk. This sale process, and the changes that will arise from it, will be interesting to watch over 2020.