Harley-Davidson closes billion-dollar deal with KKR and PIMCO

Harley-Davidson strengthens balance sheet with partial sale of HDFS. $1.25 billion will be freed up.

Harley-Davidson has just confirmed a billion-dollar deal. Its financial division, HDFS, is entering into a strategic partnership with investment companies KKR and PIMCO. Both partners are acquiring 4.9% of the shares in HDFS. At the same time, Harley-Davidson is selling a loan portfolio worth over $5 billion—at a price above par value.

The deal will free up around $1.25 billion in free capital. The company plans to use $450 million of this to reduce debt. A further $500 million will be returned to shareholders. The remainder will be retained for new investments.

Harley-Davidson retains full control of HDFS. In future, around two-thirds of new personal loans granted each year will be passed on to KKR and PIMCO. HDFS will receive fixed fees for this service. According to the company, the transaction values the business at 1.75 times its book value.

Jochen Zeitz described the deal as a significant step for all stakeholders. The restructuring will make HDFS more capital-light, efficient, and sustainable—without any restrictions for customers and dealers.

What does the deal mean for Harley customers?

HDFS will remain fully operational after the deal. Customers who want to finance their Harley can continue to do so as usual through Harley-Davidson Financial Services. The contracts, contact persons, and processes will remain unchanged.

What remains the same:

• HDFS continues to grant loans

• Existing financing arrangements will continue unchanged

• Dealer offers and financing promotions remain in place

• HDFS remains under the control of Harley-Davidson

• Customers will not notice any operational changes as a result of the change of ownership in the background.

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What may change in the long term:

1. Less risk for Harley, more outsourcing:

In future, HDFS will pass on around two-thirds of newly granted loans to KKR and PIMCO. This reduces Harley's credit risk – but also its own control over these receivables.

1. Focus on service and efficiency:

HDFS receives a fixed servicing fee for the loans it passes on. This means that the finance division is becoming more of a service provider than an owner of the loans. This can lead to faster processes—or to greater standardization.

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