TPG Capital, L.P. is believed to be rethinking its position in the competition to buy Westpac Banking Corporation's car loans business, which is now likely to have Liberty Financial Group Limited (ASX:LFG) as a solo bidder. Liberty Financial and TPG had formed a consortium to buy the loans, taking on shortlisted rivals including KKR & Co. Inc. (NYSE:KKR), Cerberus Capital Management, L.P. and Angle Finance.

Allied Credit is also preparing for the final stages of the contest, but some question whether its private equity bidding partner Bain Capital remains a motivated buyer. The thinking from most around the market is that TPG and possibly Bain are now unlikely starters after the sales process took a different path, with Westpac opting to retain almost all of the existing loans. The opportunity for buyers is now largely the right to generate new business.

The size of the portfolio of loans on offer has decreased to about $2 billion from $11 billion, with the floor plan financing available to a new owner. TPG would have earlier provided fire power for a larger Liberty Financial bid. However, the groups have a 20-year relationship, and some say TPG remains on standby if there is any need for capital by Liberty.

Bids are due in the middle of next month in a Morgan Stanley-run competition now thought to be led by loan operators rather than private equity powerhouses. Westpac has been prepared to offer synthetic loans to interested buyers, sources say.