Harley-Davidson has announced a major strategic partnership with global investment giants KKR and PIMCO, signaling a shift toward an asset-light model for its financial services arm, HDFS. As part of the deal, over $5 billion in retail loan receivables will be sold at a premium, significantly reducing Harley’s capital intensity while retaining control of HDFS operations.
The agreement also includes the sale of a 4.9% equity interest in HDFS to KKR and PIMCO, valuing the business at about 1.75x post-transaction book value. HDFS will continue originating and servicing loans, while the new partners commit to purchasing two-thirds of new annual loan originations over the next five years—also at a premium. The move allows Harley-Davidson to unlock around $1.25 billion in cash, with plans to reinvest in the core business, reduce $450 million in debt, and return $500 million to shareholders.
Executives from Harley-Davidson, KKR, and PIMCO all emphasized the long-term value of the partnership. The transaction is expected to drive higher returns on equity for HDFS, reduce credit risk on Harley-Davidson’s balance sheet, and strengthen its overall capital position.
Source: KKR
