Pepper Money (PPM AU): KKR/​Challenger’s NBIO

• This morning (9th Feb), leading non-bank lender Pepper Money (PPM AU) confirmed KKR and Challenger Ltd (CGF AU) have submitted an NBIO by way of a Scheme.

• KKR/CGF are offering A$2.60/share, a 47.7% premium to undisturbed. And ~1.49x P/B (based on 1H25 numbers). KKR currently holds 60.34%.

• CGF announced it would hold no more than 25% in Pepper Money, if delisted. CGF is down 3.6%.

Pepper Money is not very liquid - look away now if this is not your thing.

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The Trade:

• Indicative terms are pitched at levels last seen in September 2021.

• KKR knows this company inside and out.

• Trading at gross spread of 17%.

• Despite the non-binding nature, if not in, I’d get exposure here, and on weakness.