Apollo is the leading contender for the portfolio, according to market sources involved in the sale process. BOQ is seeking a strategic partner to offload the non-core loans in order to release capital and concentrate on its main banking activities. However, divesting from a high-margin segment may affect its long-term profitability.
BOQ, a regional Australian bank, is streamlining its operations. The equipment finance loan book, held under BOQ Specialist, was bought in 2014 from Investec for $440 million. The acquisition added $2.4 billion in loans and $2.7 billion in deposits. BOQ now plans a full sale of the portfolio in an effort to improve capital flexibility and return on equity.
Apollo manages $US840 billion in assets, with $US690 billion deployed in credit strategies. The firm is globally known for acquiring both performing and distressed loans. Earlier this year, it participated in financing the Twitter acquisition by taking on a portion of the $US44 billion debt connected to the deal. With $US72 billion in available capital and approximately $200 million in equity needed for the BOQ transaction, Apollo is in a strong position to move quickly.
The $3.8 billion portfolio sale includes a securitisation package from Bank of America that covers 95% of the portfolio value. This structure minimises buyer risk. Although specialist loans carry strong margins, regulators are urging regional banks like BOQ to concentrate on core services and reduce complexity in their lending divisions.
If Apollo closes the deal, it will gain access to profitable Australian loan assets and strengthen its credit investment platform in the Asia-Pacific region. The transaction also reflects the growing interest of global investors in Australia’s reshaping banking sector, where streamlining and consolidation are creating fresh investment pathways.
