A large education loan company is on the block, and that’s a well-known fact by now. But what’s latest is how valuations are getting frozen. The seller is one of the largest and oldest financial services companies in the country. Till date, it hasn’t bought anything expensive nor has it sold anything cheap. It has always got the price it wanted. But this time around, it is having a tough time replicating its deal strategy with this equally large and vintage private equity.
Once it goes out of the father’s fold, money isn’t going to come by for education loans at the current rate. Access to funds at the cheapest rates has been this company’s trump card for long. If that’s not going to be the case post July or so, PE buyers have already started questioning if they should pay top dollars.
But for the big daddy, hiving off this business in the next two weeks is imperative to meet the covenants of the mega merger underway. Now, who will give in? We will know in a few days.