Coles takes remaining credit card stake

Screen-Shot-2015-05-04-at-9.12.56-amWesfarmers will acquire the remaining 50 per cent of shares in Wesfarmers Finance, the holding company of Coles’ credit card joint venture held by GE Capital Finance JV Holdco.

The company has given notice to exercise a call option, triggered by an announcement by GE that it has entered into a sale agreement for its Australian consumer lending operations.

Wesfarmers MD, Richard Goyder, said GE has issued credit cards in Australia under the Coles brand for more than 20 years.

“Over this period, Coles has grown its presence in financial services through a continuous focus on providing additional value for customers,” Goyder said.

“It’s been a good relationship and we are pleased to now be able to operate this business in our own right.”

The joint venture began in April 2015 to hold the assets and operations of the Coles credit card portfolio comprising gross receivables of around $850 million as at March 2015.

Wesfarmers Financial Services MD, Rob Scott, said the acquisition of the profitable credit card portfolio will provide further scale and capability.

“This will build on Coles’ growth in financial services which now services over 800,000 customers covering car, home and life insurance, credit cards and mobile wallet,” Scott said.

Coles MD, John Durkan, said the acquisition will allow further flexibility in delivering compelling value in retail financial services to its customers.

“We are committed to offering Australian families great value in all our products and services, including in financial services,” Durkan said. “We will continue to offer simple, competitive products that benefit our customers.”

The joint venture is operated by a dedicated team previously employed by GE and Coles Financial Services. The transaction is not expected to materially impact Coles’ earnings over the next year after allowing for integration and acquisition costs.

The transaction will initially be funded from Wesfarmers’ existing corporate debt facilities with other financing arrangements likely to be introduced over time. It is expected it will be finalised this financial year.

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