Blackstone has agreed to finance the acquisition of HSBC Holdings Plc's A$36 billion ($25 billion) Australian home loan portfolio, the companies confirmed, in what Blackstone described as the largest residential mortgage portfolio transaction on record. The investment will be made through funds managed by Blackstone Credit & Insurance, Blackstone Tactical Opportunities and Blackstone Real Estate Debt Strategies. Bloomberg first reported the transaction on July 30, and Blackstone confirmed the deal in a statement days later.
Deal Structure and Financing
The portfolio will be acquired by Virgo BidCo, a vehicle wholly owned by funds managed by Blackstone affiliates. Rather than taking on loan servicing directly, Blackstone will rely on Pepper Money, a KKR-backed non-bank lender, to manage the book and oversee the transition of borrowers away from HSBC. Pepper Money already has experience with an HSBC exit: it took over HSBC New Zealand's NZ$1.4 billion mortgage portfolio in 2023.
"International expansion is a major priority for our private credit business," said Dan Leiter, Blackstone Credit & Insurance's head of international. "Blackstone's global credit platform, deep origination capabilities, and long-standing relationships position us to deliver unique value to clients around the world." Mike Culhane, the firm's head of international business development for asset-based finance, said Blackstone was investing in a high-quality Australian mortgage portfolio while supporting a smooth transition for HSBC customers.
HSBC's Exit From Retail Banking
The sale marks HSBC's phased withdrawal from consumer banking in Australia. Once the transaction closes, HSBC's corporate and institutional banking, asset management and private banking businesses in the country will be folded into the Sydney branch of the Hongkong and Shanghai Banking Corporation, the bank's flagship subsidiary. HSBC expects the deal to produce an immaterial pre-tax loss of less than $100 million for the group by the first half of 2027, alongside roughly $300 million in restructuring costs and write-offs.
The transaction is expected to close in the first half of 2027, subject to customary conditions and regulatory approvals. It extends a run of retail-banking retreats by international lenders in Australia, where domestic players including CBA, Westpac, NAB and ANZ dominate mortgage lending and foreign banks have struggled to compete on scale.
Blackstone's Growing Credit Footprint
The Australian deal adds to nearly two decades of Blackstone investment in the country and reflects the expanding role of private capital in absorbing loan books that banks want off their balance sheets. Jon Gray, Blackstone's president and chief operating officer, said the firm's combined credit platform, spanning corporate and real estate lending, had grown to nearly $550 billion, up 13% year over year. Regulatory approval remains the main variable before the deal can close, given the scale of the loan book and its significance to Australia's mortgage market.