PACW - PacWest sells lender-finance loan portfolio to Ares Management
2023-06-26 11:52:44 ET
PacWest Bancorp ( NASDAQ: PACW ) is in focus this morning after Ares Management Corp agreed to buy its specialty finance portfolio.
What’s in it for Ares Management?
California-based Ares acquired $3.5 billion worth of the bank’s lender-finance loan portfolio on Monday. In a press release , Jeffrey Kramer – its Head of ABS said:
We are excited to broaden and enhance our existing Alternative Credit portfolio through this strategic acquisition of a high-quality portfolio of asset-backed loans.
The deal will deliver about $2.0 billion to PacWest Corp before transaction costs. According to the bank holding company, additional tranches aimed at further improving liquidity are expected in the future.
Despite a significant boost on Monday, PacWest stock is still down roughly 75% versus its year-to-date high.
What’s in it for PacWest Corp?
Ares secured financing from Barclays for the said agreement that could further help PacWest Corp deliver on its commitment to returning focus to relationship-based community banking.
Reacting to the stock market news , Truist analyst Brandon King agreed that the bank looked better positioned now that it has further improved its liquidity as well as capital ratios with today’s sale.
We expect the company to pay down borrowings, which stood at $12 billion at the end of last quarter.
He currently has a “hold” rating on PacWest Corp that reported a near 10% hit to deposits in early May ( find out more ). The sale of its lender-finance loan portfolio to Ares follows the sale of its construction loans to Kennedy Wilson for $2.36 billion just weeks ago.
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