Carlyle and KKR buy $10.1bn student loan portfolio

Carlyle and KKR have formed a strategic partnership to buy an approximately $10.1bn (£7.76bn) portfolio of prime student loans from Discover Financial Services.

The transaction is expected to close by the end of the year, with Monogram LLC – a portfolio company of Carlyle – serving as portfolio manager.

“This acquisition highlights Carlyle’s proven expertise in private student loans and asset-backed finance, demonstrating our global credit business’s ability to provide scaled, tailored solutions to meet our clients’ dynamic needs,” said Akhil Bansal, head of credit strategic solutions at Carlyle.

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“As the lending space evolves, we believe private markets are well-positioned to offer financial institutions increased flexibility amidst this transformation.”

RJ Madden, a managing director at KKR, said that the transaction “demonstrates the value that scaled private lenders can bring to key areas of the economy as the priorities of traditional lenders continue to evolve.”

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“We are pleased to leverage our scale, deep experience in asset-backed finance investing and capital markets capabilities to be a capital solutions provider of choice to financial institutions that are focusing on optimizing their balance sheets,” Madden added.

Carlyle’s investment in the portfolio was led by its credit strategic solutions team, while KKR’s investment came primarily from its asset-backed finance strategy and other credit vehicles and accounts.

KKR has made more than 80 asset-backed finance investments globally since 2016 through a combination of portfolio acquisitions, platform investments and structured investments.

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