The main game for ASX-listed Pepper Group in the next month or two will be whether KKR Credit Advisors formalises a $650 million bid for the lender and loan servicing company.
But Street Talk understands there may also be action over the medium term in one of Pepper's Asian investments. Industry players are keen to find out if Pepper is a seller of its 12 per cent stake in Asian subprime lender PrimeCredit.
The carrying value of the holding is almost $100 million in Pepper's financial accounts and sources have suggested several strategic options are being canvassed for the investment.
Pepper isn't thought to be an imminent seller and advisers are not actively working on a deal or PrimeCredit divestment. However, some consideration would be warranted given fellow consortium partner York Capital is said to be weighing exiting its PrimeCredit investment.
Pepper was part of a consortium led by China Travel Financial Holdings which acquired PrimeCredit from Standard Chartered two years ago. China Travel took a majority stake as part of the transaction.
Initial plans by the consortium centred on accelerating growth at PrimeCredit and looking to float the company in Hong Kong in two-to-three years.
In the meantime, Pepper has granted exclusivity to KKR in order for it to perform due diligence. As part of the indicative proposal, revealed by this column, shareholders would receive a fully franked dividend of 3¢ a share on top of the offer price of $3.60 per share.
Pepper's largest shareholder is non-executive chairman Seumas Dawes.
