US credit card firm to sell $10B in student loans, Carlyle and KKR are top bidders

According to a report by the Financial Times on Ranking of automatic foreign exchange transactionsThursday, private equity firms Carlyle Group and KKR are the primary bidders for Discover Financial's $10 billion student loan portfolio.

The report states that the two companies are "collaborating" on the bid as private equity firms seek to expand their interest in credit.

The report did not specify how the two companies are collaborating.

The Financial Times said that other private equity firms such as Ares, Blackstone, Brookfield, Fortress, and Oak Capital also studied bids for the loan portfolio.

Discover Financial, Carlyle Group, KKR, Ares, Blackstone, Brookfield, Fortress, and Oak Capital did not immediately respond to Reuters' request for comment.

The Financial Times added that the deal could be concluded later this month or in early July.

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

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

The transaction comes as regulatory agencies under President Joe Biden's administration have increased scrutiny of bank mergers, and the debate over the risks and benefits of such mergers has intensified following the approval of acquisitions of bankrupt bank assets by JPMorgan and New York Community Bank last year.

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