Sallie Mae looks like the next Blackstone target | FT Alphaville

Sallie Mae looks like the next Blackstone target

Sallie Mae, the US institution which supports college students with loans in much the same way that Fannie Mae and Freddie Mac support the US housing market, could be the next-mega-buyout, according to the New York Times.

Citing “people briefed on the discussions,” the report says Blackstone Group is one potential bidder, but added that other private equity firms are interested in a deal that could be valued at $20bn or more.

However, the takeover discussions are taking place amid a probe by state and federal officials over the financial relationships between college officials and student loan companies. “This week, Sallie Mae agreed to pay $2m and to change its business practises to settle an investigation by the New York attorney general’s office,” the NYT noted.

Sallie Mae, officially the SLM Corporation, was created by Congress in 1972 to support a secondary market for student loans issued by private lenders. It was privatised in the 1990s, becoming a publicly listed company in 2004. Its government-subsidised loan book runs to $142bn, while reported net income last year was $1.2bn.

The company is being advised by UBS.