KKR Secures $7.2B Prime RV Loan Portfolio In Strategic Move With BMO Collaboration

KKR & Co Inc KKR disclosed the buyout of a super-prime recreational vehicle (RV) loan portfolio worth $7.2 billion from BMO Bank National Association, part of BMO Financial Group (BMO). 

As per the deal, BMO will remain the servicer of the loans and will continue to originate and manage RV loans, with no expected impact to dealers, borrowers, and employees.

Concurrently with the sale, BMO bought senior notes worth around $6.4 billion collateralized by the sold loans. 

The acquisition will offer diversification to KKR's traditional corporate credit and attractive risk-adjusted returns. 

The buyout is at par with KKR's Asset-Based Finance (ABF) strategy, which focuses on privately originated and negotiated credit investments supported by large and diversified pools of financial and hard assets.

Since 2016, KKR has made 73 ABF investments globally through several portfolio acquisitions, platform investments and structured investments. 

The firm presently has about $47 billion in ABF assets under management and a team of more than 50 professionals directly involved in the ABF effort globally.

Avi Korn and Chris Mellia, Co-Heads of U.S. Asset-Based Finance at KKR, said, "We are proud to serve as a strategic partner to banks as they focus on optimizing their balance sheets" said Avi Korn and Chris Mellia, Co-Heads of U.S. Asset-Based Finance at KKR.

KKR's investment comes from its credit funds and accounts. Kennedy Lewis Investment Management LLC also participated in the transaction alongside KKR and other investors.

In Q3, KKR's assets under management rose 6% Y/Y to $528 billion, with organic new capital of $14 billion raised in Q3 2023.

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Price Action: KKR shares closed higher by 0.96% at $83.81 on Friday.