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Carlyle and KKR underlined the trend in July when they bought a $10.1b portfolio of private student loans at auction from Discover Financial Services, where half of the loans carry fixed rates and the rest have floating rates, according to the asset managers. The move by the two firms takes advantage of pending new capital requirements for U.S. banks, which require banks to set aside more capital to guard against risk and which have drawn criticism from bankers as too restrictive.
“The biggest investment thematic in the asset-based finance part of the business for us, for the last year, has been the selling of assets out of some of the banks,” said Dan Pietrzak, the global head of private credit at New York-based KKR. Banks have been looking to shed assets—including student loans—for a number of reasons including regulatory, capital and compliance concerns, he said.
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