Finbond has entered into an agreement to acquire 100% of US based short-term lender America’s Financial Choice Inc. for US$7 million (R99.6 million). The closing date of the transaction is expected to be 1 December 2017.
According to Finbond’s CEO Dr Willem van Aardt, America’s Financial Choice has an extensive successful track record as an alternative lender specialising in instalment and auto title lending. It operates through 20 brick and mortar locations in the state of Illinois and has been in existence since 2003. He says the acquisition is in line with Finbond’s strategy to transform itself into a multinational financial services business.
“Our aim is to diversify across geographies, market segments and products and generate the majority of our revenue in US dollars,” says van Aardt.
Finbond currently has a presence in 16 US states, namely California, Illinois, Wisconsin, Missouri, South Carolina, Tennessee, New Mexico, Utah, Nevada, Louisiana, Mississippi, Alabama, Oklahoma, Michigan, Florida and Indiana. It also has a presence in Ontario, Canada.
“Growing our US dollar revenue base provides geographical diversification, greater economies of scale and an effective hedge against rand volatility and political risk,” says van Aardt. “Most of all, it increases our core short-term lending competency.”
He says Finbond’s rapid North American expansion has been enabled by teaming up with owner-managers with 10 – 30 years’ experience in operating short-term unsecured lending businesses in the region.
America’s Financial Choice specialises in the design and delivery of value and solution based short-term unsecured consumer instalment loans and auto title loans tailored around borrower requirements. The company’s wide range of consumer finance products gives it the ability to offer credit to a broad spectrum market.
Its key strengths include experienced management and sound business structure, a strong market position in Illinois and a healthy focus on regulatory compliance, with the proven ability to effectively steer through regulatory changes. It has a healthy repeat customer base, focused cash generative short-term instalment loan and title loan products, and efficient collection capabilities.
The value of the normalised assets of America’s Financial Choice at 31 December 2016 was US$3.8 million (R53.2 million). Its net profits after tax attributable to its assets for the year ended 31 December 2016 were US$1.7 million (R23.8 million), translating to earnings before interest, taxation, depreciation and amortization (EBITDA) of US$2.1 million (R29.4 million).
The conclusion of the acquisition of America’s Financial Choice is subject to the final approval of the Finbond group’s Board, Executive Committee, Investment Committee and Risk Committee.