Pacific Equity Partners (PEP) is set to invest in a financing package by Household Capital to provide retirement funding and housing to older Australians, joining existing mezzanine debt provider IFM Investors and Citi.
It brings Household Capital’s funding capabilities to some $600 million, the firm confirmed. Previously, Citi and IFM had come on board in 2021 with a $300 million financing package.
The firm also counts UK-based, Legal & General, and Sydney-based, Helia Group, as strategic corporate equity investors and partners.
“Many Australians are being challenged by cost-of-living pressures and higher interest payments. This funding will allow Household Capital to meet increasing demand from Australian home owners to access the wealth in their homes and support adequate retirement funding, housing and care,” said Dr Joshua Funder, chief executive of Household Capital.
According to Jake Haines, PEP managing director, they identified Household Capital as a “high-quality opportunity” in an important new category.
Presently, Australian retirees are among the wealthiest in the world with median home equity for retired home owners over $800,000. However, median household super balances at retirement are under $200,000, attributed to a low compulsory contribution of 3 per cent that began halfway through the working lives of Baby Boomers.
Haines added that Household Capital has pioneered “innovative, scalable debt funding” to meet the retirement funding and housing needs of the ageing population.
Household Capital’s chairman, Nick Sherry, who is a former federal minister for superannuation, observed how the funding arrangement helps deliver back to Australians their own wealth, stored in the value of their homes.
“The wealth of Baby Boomers is mostly tied up in their home, and our mission is to help Australians Live Well at Home,” he stated.
“Working together, we can help deliver widespread access to some of the $1 trillion in home equity wealth already saved by Australian retirees, providing certain, lifelong retirement funding at home. The family home has always been a missing link in the nation’s retirement funding system.”
In its continued mission towards Australian home equity retirement funding, the firm acquired government home equity scheme specialist Pension Boost last year.
It would enable Household Capital to provide both Home Equity Access Scheme (HEAS) and Household Loan products to older Australians and help retirement funding providers like superannuation funds.
Pension Boost founder, Paul Rogan, also joined Household Capital’s advisory board as a part of the acquisition.
In April, it welcomed Ian Parkes as chief financial officer, who brings more than 25 years of experience to the role across mortgage distribution and origination, accounting, audit, risk, compliance and securitisation to the role.
