PacWest sells $3.5 billion asset-backed loan pool to Ares

(Bloomberg) – PacWest Bancorp sold a $3.5 billion portfolio of asset-backed loans to Ares Management Corp., offloading more assets to boost liquidity amid concerns about deposit outflows.

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Ares’ Alternative Credit funds purchased the specialist asset-backed finance portfolio comprising consumer loans, mortgages and timeshare receivables, the fund manager said in a statement on Monday. PacWest said in a filing that the first tranche of the deal closed last week and generated $2 billion in cash proceeds before transaction costs.

PacWest, a regional bank based in Beverly Hills, is strengthening its finances after deposit runs hit several regional lenders earlier this year, leading to the collapse of three California-based banks and one in New York.

Earlier this month, it completed the first part of the sale of a separate $5.7 billion loan portfolio to real estate investment firm Kennedy Wilson Holdings Inc. The transaction follows an agreement of March which brought in $1.4 billion from a funding facility provided by Apollo Global Management-investment firm Atlas SP Partners.

Bloomberg reported in April that PacWest was considering selling its lender financing arm and associated lending to the platform.

Read more: PacWest bosses were trying to start over. Then SVB failed

PacWest wasn’t the only company to turn to asset managers to help shrink the balance sheet amid deposit outflows. In May, Atlas SP, Angelo Gordon and Varde Partners – in partnership with Pagaya Technologies – purchased a pool of consumer loans from a US credit union to raise liquidity amid turmoil in the banking sector.

PacWest shares rose 6.1% in early trading in New York. Its stock has fallen 69% this year through Friday amid the turmoil.

The wallet purchased by Ares has a total commitment amount of $3.54 billion, including an outstanding principal balance of $2.21 billion, PacWest said in the filing.

(Updates with recent deals and PacWest history beginning in the fourth paragraph.)

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