Carlyle, KKR win auction for $10 billion student loan book from Discover Financial, FT reports

(Reuters) -Carlyle and KKR & Co (NYSE:) won an auction for a $10 billion student loan book from Discover Financial, the Financial Times reported on Wednesday, citing people familiar with the matter.

According to the report, the joint bid topped a competing offer from Sixth Street, BlackRock (NYSE:) and the Canada Pension Plan Investment Board, with the loan book selling above par.

KKR, Carlyle and Discover Financial did not immediately respond to Reuters’ requests for comment.

The report adds that the auction attracted some of the biggest names in private credit such as Ares, Blackstone (NYSE:) and Oaktree.

Last November, Discover Financial said it was exploring the sale of its student loan portfolio, stating that a potential sale would see the servicing of these loans transferred to a third party.

Earlier this year, Warren Buffett-backed U.S. consumer bank Capital One said it would acquire Discover Financial for $35.3 billion in an all-stock deal.

The deal comes as U.S. regulators ramp up scrutiny of bank mergers under President Biden’s administration, and as debate over the risks and benefits of bank mergers intensify after JPMorgan and New York Community Bank were allowed to snap up failed bank assets last year.