Pacific Equity Partners forges into reverse mortgage sector
Sydney buyout fund Pacific Equity Partners is targeting a slice of Australia’s burgeoning reverse mortgage market, snapping up a controlling stake in unlisted retirement funding provider, Household Capital.
Street Talk can reveal PEP’s Capital Solutions dealmakers have invested in the mezzanine debt portion of Household Capital’s wholesale funding facility, alongside superannuation funds house IFM Investors and senior financier Citi.
PEP MD Jake Haines told Street Talk that Household Capital was a ‘high-quality opportunity’, operating in an ‘important new category.’ AFR
The deal with PEP’s expected to double the size of Household Capital’s funding capability to over $600 million, and ramp up expansion of its services to Australia’s so-called “baby boomers”, who are wrestling with inadequate super balances because of cost of living pressures and increasing life expectancy.
A reverse mortgage allows borrowers from the age of 60 to convert the equity in their homes into cash. Equity is the value of the property, minus any mortgage debt.
Big banks have ceased offering the products and the entire mortgage market tightened lending standards after the Hayne royal commission in 2018-19, making it harder for some older Australians to get or refinance 30-year mortgages.
“Household Capital has pioneered innovative, scalable debt funding to meet the retirement funding and housing needs of an ageing population,” PEP managing director Jake Haines told Street Talk on Sunday.
“This funding will allow Household Capital to meet increasing demand from Australian homeowners to access the wealth in their homes and support adequate retirement funding, housing and care,” Household Capital chief executive, Dr Joshua Funder, said.
PEP’s Capital
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