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Fri 13 Mar 2015 04:11 AM

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Abu Dhabi's SWF said to eye stake in VW financing arm

Source says consortium including Abu Dhabi Investment Authority is in talks to buy 50% stake in LeasePlan

Abu Dhabi's SWF said to eye stake in VW financing arm

Volkswagen is in talks to sell a 50 percent stake in financing arm LeasePlan to a consortium including the Abu Dhabi Investment Authority, a source familiar with the plan said, as the carmaker cuts costs and refocuses its business.

The Wolfsburg-based carmaker owns VW Leasing GmbH, its own in-house leasing business, and is increasingly relying on its Volkswagen Financial Services arm, making it harder to justify holding a stake in a third-party leasing business.

A sale of the whole of LeasePlan could fetch up to 3 billion euros ($3.2 billion), the source said, adding a deal could come as early as this month. The source echoed details of a report in the Wall Street Journal.

Volkswagen's finance chief Hans Dieter Poetsch on Thursday declined to comment on a potential sale of itsLeasePlan stake.

On Wednesday, a spokeswoman for LeasePlan said the company was in takeover talks.

The exploration of a deal comes as Volkswagen seeks to make 5 billion euros ($5.3 billion) of savings a year by 2017 at its namesake passenger car brand to close a profitability gap with rivals such as Toyota.

"The group has become very complex, but the VW brand reorganisation is a sign that they are starting to recognise some of that," said one London-based analyst, who asked not to be identified because he was not authorised to comment on the LeasePlan sale.

"They are already quite good at supporting sales with their lending arm, so why finance other people's cars?"

A bidding consortium which includes the Abu Dhabi Investment Authority, Singapore's Government Investment Corporation (GIC) and private equity company TDR Capital was the frontrunner to clinch a deal, the source said.

Talks are for the sale of the whole company and any deal needs the approval of the Dutch central bank and the financial markets authority since LeasePlan operates a Dutch banking licence, the LeasePlan spokeswoman said.

The other 50 percent of the Almere, Netherlands-based company, which leases 1.42 million cars annually, is held by Bankhaus Metzler. In February, LeasePlan reported 2014 net profit of 372 million euros.

A spokesman for Metzler bank referred questions to LeasePlan.

Sky News reported on Wednesday that one bidder was a consortium led by Dutch pension fund PGGM, including the Abu Dhabi Investment Authority, Singapore's GIC and TDR Capital.

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