Harley-Davidson Sells $5B in Loans, Unlocks $1.25B Cash in Deal With KKR, PIMCO; Sells 4.9% HDFS Stake at 1.75x Book Value

Author: Benzinga Newsdesk | July 30, 2025 07:20am

Harley-Davidson, Inc. (the "Company" or "Harley-Davidson") (NYSE:HOG) today announced that HDFS has entered into a long-term strategic partnership with KKR, a leading global investment firm, and PIMCO, a global leader in active fixed income with expertise across public and private markets. This partnership transforms HDFS into a capital-light financing business through the sale of existing and future retail loans while maintaining its strategic value to Harley-Davidson, its dealers, customers and investors. The sale of more than $5 billion of existing retail loan receivables is valued at a premium to par.

Under the terms of the agreement, HDFS will also sell 4.9% common equity interests to investment vehicles managed by KKR and PIMCO at an implied valuation of ~1.75x price to post-transaction book value. Harley-Davidson will retain control of HDFS, which will continue to originate and service existing and new consumer loans. The Company expects HDFS operating income to grow back toward pre-transaction levels over time.  

The Company plans to use the approximately $1.25 billion of cash unlocked through the transaction to reinvest to support demand-driven investments, reduce $450 million of HDI debt and return approximately $500 million to shareholders.

KKR's investment comes from KKR-managed credit funds and accounts via the firm's Asset-Based Finance strategy. PIMCO's investment comes from funds and accounts focused on PIMCO's private strategies.

Management Commentary

"This transaction delivers benefits to all of Harley-Davidson's stakeholders and marks the beginning of an exciting new chapter for HDFS," said Harley-Davidson Chairman, President, and CEO Jochen Zeitz. "From the outset of this process, we set out to demonstrate the class-leading returns of HDFS, create a long-term stable funding mechanism, and maintain the strong financial profile of HDFS, all without impacting service to dealers and customers. Our strategic partnership with KKR and PIMCO achieves each of these core objectives, valuing the HDFS business at a premium multiple and transforming it into a more capital-efficient business with an expected significantly higher return on equity. Importantly, the approximately $1.25 billion of cash this transaction unlocks allows us to strengthen Harley-Davidson by supporting additional investment into the business, further reducing debt, and accelerating cash returns to shareholders. For our customers and dealers, HDFS will continue to originate and service new and existing loans and provide dealers with service, benefits and flexibility commensurate with what HDFS currently provides, while we also invest in the future of Harley-Davidson for years to come. We are pleased we were able to deliver such a successful strategic partnership for all of our stakeholders."

Strategic Partner Commentary

"This transaction highlights the strength and scale of our Asset-Based Finance (ABF) business, which has grown significantly alongside the rapid expansion of this market," said Daniel Pietrzak, Partner and Global Head of Private Credit at KKR. "We are proud to have become the strategic partner of choice for blue-chip consumer finance businesses like Harley-Davidson Financial Services."

"HDFS' high-quality portfolio and significant asset generation capabilities exemplify the dynamic opportunities we are seeing in the ABF space as businesses continue to transition from capital heavy to capital light to optimize their balance sheets. We look forward to supporting the HDFS team in this long-term strategic partnership," said Steve Sun, Director at KKR. 

"PIMCO, a leading investor in asset-based finance globally, is excited to partner with Harley-Davidson on this transformative deal which builds on our partnership with the iconic motorcycle brand over many years, to bring compelling value to our clients via H-D's high-quality financing arm," said Harin de Silva, Managing Director and Portfolio Manager who chairs PIMCO's Private Strategies Leadership team. "PIMCO has been a long-standing investor in asset-based finance with deep expertise and decades of experience, and this transaction demonstrates our commitment to identifying attractive risk-adjusted returns for our clients within the rapidly evolving private credit landscape."

Strategic Rationale

• Asset-Light Growth: HDFS expects to more efficiently grow its balance sheet and operating income over time following a benefit related to the sale of existing retail loan receivables and release of loan loss reserve in 2025 and subsequent rebasing to reduced operating income reflecting the new asset-light model in 2026. Under the terms of the five-year Forward Flow Agreement, HDFS will retain approximately one-third of annual retail loan originations on its balance sheet and generate new revenue streams through a fixed servicing fee on loans purchased by KKR and PIMCO. The agreement also provides for future retail loan sales to occur at a premium to par.
• Strengthened Offering: Harley-Davidson to retain full control of HDFS while creating a long-term, stable funding mechanism through the support of KKR and PIMCO. Dealers and customers will continue to receive the strong service levels to which they are accustomed without any impact to wholesale loans, consumer credit cards or other offerings.
• Enhanced Capital Allocation Flexibility: Transaction unlocks approximately $1.25 billion of cash for Harley-Davidson after the expected repayment of HDFS debt associated with retail loan receivables. The planned reduction of an additional $450 million of Harley-Davidson debt is expected to strengthen the Company's balance sheet and create strategic optionality to help navigate the current environment, return capital to shareholders and support future demand driving investments.
• Long-Term Value Creation: Transaction values the post-transaction HDFS business at a premium multiple and is expected to reduce Harley-Davidson's overall leverage and perceived risk, which is expected to lower Harley-Davidson's cost of capital on a go-forward basis. This transaction is also expected to significantly increase the future ROE of HDFS while simultaneously maintaining HDFS as a well-capitalized business and reducing credit risk on the Company's balance sheet related to its existing portfolio of receivables.

Transaction Highlights

• HDFS has agreed to sell a 4.9% common equity interest to investment vehicles managed by KKR and PIMCO at approximately 1.75x post-transaction book value.
• HDFS has agreed to sell over $5 billion of existing gross consumer retail loan receivables and residual interests in securitized consumer loan receivables at a premium.
• HDFS expects to use a portion of the proceeds to reduce indebtedness to optimize the post transaction capital structure.
• HDFS' new strategic partners have entered into a 5-year agreement, whereby the partners purchase approximately two-thirds of annual HDFS future retail loan originations at a premium. Under the terms of agreement, HDFS will continue to originate and service retail loans and receive fixed fees for servicing loans sold to strategic partners.

Harley-Davidson and Harley-Davidson Financial Services Advisors

Barclays acted as exclusive financial advisor and Latham & Watkins and Sidley Austin acted as legal advisors for Harley-Davidson.

Posted In: HOG KKR