NEW YORK (
) -- The reported sale of
will most likely attract other lenders as potential suitors rather than a private equity firm, according to industry watchers.
Cerberus Capital Management
is supposedly seeking buyers for its stake in the auto lender, which the private-equity firm acquired as part of its takeover of Chrysler LLC in 2007,
The auto lender has a book value of about $6 billion or $7 billion.
"This is an opportunity for a strategic partner. A bank or current auto financing unit would benefit the most from an acquisition due to their ability to realize synergies," said Carla Zilka founder & principal advisor, NexGen Advisors. "I don't believe a PE firm would be interested unless it was discounted heavily."
Jim McTevia of McTevia & Associates said that any large banks looking to get into auto lending would make sense. He also added that Cerberus would most likely have to sell the asset at a discount.
"They are probably looking to exit the auto industry and the obvious buyer would be financial institutions," said McTevia.
Larger banks have been looking at ways to diversify businesses as financial regulations threaten revenue streams. However, most large banks have been divesting assets as opposed to purchasing them, McTevia explained.
Pat O'Keefe, managing director of O'Keefe & Associates said that typically private equity firms have had a rough time in the auto sector. He says that banks have generally been competitors. He says it would make the most sense if Chrysler bought the lender back so it could compete with
, which both own financing arms.
"These captive auto arms have been goldmines," said Pat O'Keefe, managing director of O'Keefe & Associates. "GMAC was a goldmine until it went into the mortgage industry"
--Written by Maria Woehr in New York.
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