Affinity Equity Partners is preparing to launch a sale process to exit Australian non-bank lender Scottish Pacific (ScotPac) in the first quarter of 2026, according to three sources familiar with the situation.

The Hong Kong-headquartered buyout firm is likely to send out teasers later this year, the first and second sources said.

Although the formal sale process has yet to be launched, there has been ongoing preliminary discussion among Affinity and some potential buyers, they said.

Affinity, which has owned ScotPac since 2018, has received strong inbound interest in this asset, according to the first source, who points to both trade and private equity buyers in Australia and from overseas, including Japan.

The second source added that some regional banks, especially Japanese lenders, have expressed interest in ScotPac to tap the Australian market.

The deal size is estimated to be around USD 600m-USD 700m, according to the second and a third source.

ScotPac reported steady growth in top-line revenue with an average 9%-10% CAGR in the past few years, the second source said. It is expected to hit around AUD 230m in revenue this year with an EBIT margin of around 50%, the same source said.

UBS has been appointed as the sell-side advisor to review exit options, as reported by the Australian Financial Review last month. Mergermarket flagged in January 2024 that Affinity started preparations internally to look for an exit, but would wait for another exit window if there was a significant valuation gap between the vendor and potential suitors.

ScotPac has reportedly been of interest to Australian banks like National Australia Bank, Judo Bank and Commonwealth Bank of Australia, which reportedly hired Gresham in 2023 to help make an offer.

As suggested by this news service, rumblings in deal activity in the Australian non-bank lending sector could signal a return to M&A as players in the highly fragmented space face pressure to boost profits. All eyes will be on ScotPac, which would be a good deal to reignite deal activity in the sector, the report said.

Established in 1988, ScotPac offers a wide range of business and commercial finance solutions, including invoice finance, trade finance and asset finance. It has so far supported more than 9300 businesses with AUD 26.3bn funded annually, making the company Australia’s largest non-bank business lender, according to its website.

The company has been held by Affinity for more than six years, since being acquired in a 100% take-private deal in December 2018 at an equity value of AUD 612m (USD 446m), according to Mergermarket’s database.

Affinity declined to comment.