KKR spices up Pepper bid to whet investor appetite

The Kohlberg Kravis Robert team behind the $650 million bid for Pepper Group is working overtime to get shareholders on side, with the transaction not a done deal.

The private equity giant is preparing a scheme booklet that will be sent to shareholders shortly to press on with its $3.60 a share offer. It is also prepared to offer holders shares in the KKR-controlled company making the bid.

KKR beat out major rivals such as Bain and JC Flowers in July to land in the box seat to gain control of the major non-conforming lending business, which has been through a recent resurgence.

Perpetual emerged as an early stumbling block when it flagged it was unlikely to vote its 14.9 per cent stake in favour of the deal.

Since then, DataRoom understands KKR has struggled to gain the backing of Pepper’s independent shareholders aside from the founding group.

Pepper chairman Seumas Dawes holds 29.7 per cent, valued at a hefty $195m, while founder Mike Culhane has a 4.48 per cent stake. Chief financial officer Cameron Small also has a small stake. Between them the three men hold 35.5 per cent of Pepper.

The trio plans to sell into the KKR offer, which was initially thought to be enough support to push the plan over the line.

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Source: KKR spices up Pepper bid to whet investor appetite – The Australian