Pepper Money and KKR have agreed to acquire Westpac’s RAMS home loan portfolio, marking a significant move in Australia’s mortgage servicing landscape. The $21.4 billion portfolio acquisition aligns with Pepper Money’s strategy to expand its capital-light servicing business.
- Consortium including Pepper Money and KKR to acquire $21.4 billion RAMS home loan portfolio
- Pepper Money to acquire legal title and service the portfolio
- Transaction supports Pepper Money’s capital-light servicing growth strategy
- Completion subject to regulatory approvals including FIRB and ACCC
- Deal targeted to complete in Q3 2026
A Strategic Acquisition in Mortgage Lending
In a move that underscores the evolving dynamics of Australia’s mortgage market, Pepper Money Limited (ASX, PPM) and global investment firm KKR have announced a consortium agreement to acquire the RAMS home loan portfolio from Westpac Banking Corporation. The portfolio, valued at approximately $21.4 billion as of September 30, 2025, represents a substantial chunk of residential mortgages and signals a shift in ownership from a major bank to a specialist lender and private equity partnership.
Pepper Money’s Role and Strategic Intent
Pepper Money will take on the legal title of the loans and will be appointed as the servicer of the portfolio. This dual role leverages Pepper Money’s operational expertise in mortgage servicing and customer engagement, areas where it has built a strong reputation since its establishment in 2000. Importantly, Pepper Money will hold a small, non-material stake in the securitisation financing vehicle acquiring the beneficial interest in the portfolio, alongside other consortium members.
This acquisition fits neatly into Pepper Money’s broader strategy to grow its capital-light servicing business. By focusing on servicing rather than holding large loan assets on its balance sheet, Pepper Money aims to generate annuity-style earnings that provide operational scale and diversification benefits. This approach can offer more predictable revenue streams and potentially lower capital requirements, a significant advantage in the competitive mortgage lending sector.
KKR’s Investment and Market Implications
KKR’s involvement comes through its managed credit funds and accounts, aligned with the firm’s Asset-Based Finance strategy. This partnership brings together Pepper Money’s servicing capabilities with KKR’s global investment expertise, potentially creating a powerful platform for managing and growing the portfolio.
The acquisition also reflects a broader trend of non-bank lenders and private equity firms increasing their footprint in Australian home lending, particularly as major banks look to streamline their mortgage books. For Westpac, divesting the RAMS portfolio may be part of a strategic refocus on core banking operations.
Regulatory Hurdles and Timeline
The transaction is subject to customary conditions precedent, including approvals from the Foreign Investment Review Board (FIRB) and the Australian Competition and Consumer Commission (ACCC). These regulatory clearances are critical given the size of the portfolio and the potential market impact. Assuming all conditions are met, the consortium targets completion in the third quarter of 2026.
Investors and market watchers will be keen to monitor the regulatory process and any conditions that may be imposed, as these could influence the timing and final structure of the deal.
Looking Ahead
This acquisition positions Pepper Money and KKR at the forefront of mortgage servicing innovation in Australia, potentially reshaping competitive dynamics. The deal’s success will depend on seamless integration and regulatory approval, but it clearly signals confidence in the growth potential of capital-light servicing models amid a changing financial landscape.
Bottom Line?
As Pepper Money and KKR await regulatory green lights, their move could redefine mortgage servicing in Australia.
Questions in the middle?
- How will regulatory approvals shape the final terms and timeline of the acquisition?
- What impact will this portfolio acquisition have on Pepper Money’s earnings and capital position?
- How might this deal influence competitive dynamics between banks and non-bank lenders in Australia?