Bidders for Lloyds Banking Group Plc’s Australian business expect they will receive news as soon as next week as to whether their offers for the assets worth some $8 billion to $10 billion have been successful.
Westpac Banking Corp is the front-runner for the Lloyds assets, a car leasing business and a loan book. Lloyds wants to ensure there are no legacy issues when it exits Australia while trying to get a significant premium for the business.
Goldman Sachs Group Inc is managing the sale on behalf of Lloyds, which also received bids this week from a group consisting of Pepper Australia Ltd, Bank of America Merrill Lynch and General Electric Co as well as a third bidder, Macquarie Group Ltd.
Bidders may get word of Lloyds’ decision as early as Monday or Tuesday.
Westpac, advised by UBS AG and Gilbert and Tobin, has an advantage over its competitors as it can pay more for Lloyds’ Australian business.
Its capital for such an acquisition can be sourced internally, unlike its competitors whose cost of capital will be higher because financing has to be arranged via a consortium of domestic and international banks.
Westpac has the dominant car leasing business in Australia, making it better able than its rivals to assess the value of the business and integrate it into its existing operations.
The bank may also be more comfortable with Lloyds’ Australian loan portfolio, which has been largely been shorn of distressed credit as its existing corporate relationships may overlap those of the British bank.