Dive Brief:
- BMO will sell its transportation and vendor finance business to alternative investment firm Stonepeak, the bank said Monday.
- The sale, part of Toronto-based BMO’s efforts to zero in on core markets and enhance capital efficiency, includes related loan portfolios in the U.S. and Canada totaling C$14.5 billion ($10.6 billion) as of the end of March.
- Under the terms of the deal, Stonepeak will acquire the business assets for cash consideration and an earnout contingent upon the achievement of certain performance targets, and BMO will use a portion of the consideration to take a 19.9% equity stake in the business. The transaction is expected to close in the fourth quarter of fiscal 2026, the bank said.
Dive Insight:
BMO's transportation finance business offers specialized financing for trucks and trailers mainly through dealer-managed relationships, while its vendor finance business handles equipment financing through equipment manufacturers and their dealer networks, the $1.5 trillion-asset bank said.
The businesses, based in Irving, Texas, serve as one of the largest lenders to the commercial truck and trailer segment in North America, with about 700 employees and operations in the U.S. and Canada, Stonepeak said in its news release.
“This transaction is consistent with BMO's focus on delivering sustained profitable growth, and enables us to invest in areas that deliver the full power of BMO to our clients,” Aron Levine, president of BMO U.S., said in the bank’s news release. “We're allocating capital to areas with strong potential for long-term value creation while obtaining an equity interest in future income of the transportation and vendor finance businesses through a more capital efficient structure.”
BMO is projecting a net after-tax charge of about C$900 million ($656 million) primarily related to goodwill in the fiscal third quarter, according to the news release.
The sale is expected to bolster the bank’s common equity tier 1 ratio by about 28 basis points largely due to the reduction of risk weighted assets. The deal is also expected to contribute about 30 basis points toward the bank’s return on equity targets, according to an investor presentation.
Levine noted New York City-based Stonepeak’s “deep expertise in transportation-focused asset leasing.” The firm, which has about $88 billion in assets under management, focuses on transportation and logistics, digital infrastructure, energy and energy transition, and real estate sectors.
Will Schleier, senior managing director at Stonepeak, said the firm is acquiring “one of North America's premier transportation financing platforms.” After the deal closes, the business will continue to be led by Gary Kempinski, head of transportation and vendor finance at BMO, Stonepeak said.
“We are excited to work closely with BMO and the outstanding leadership team in place to invest further in the business, build on its strong performance, and grow its commercial customer base while preserving the culture, reputation, and relationships that have made the business so successful to date,” Schleier said.
