Finbond buys stake in Blake Enterprises
Latest acquisition increases short-term lender’s presence to 223 branches across 16 states in the US
Financial services group Finbond shows no signs of slowing its expansion into North America, announcing on Wednesday that it had acquired a 75% share in US-based short-term unsecured lender Blake Enterprises.
The $9.6m (R129.6m) purchase follows the group’s eight North American acquisitions in 2016, in line with its ambition to become the leading short-term lender on that continent.
Following the Blake Enterprises transaction, about 60% to 70% of Finbond’s earnings would be denominated in US dollars. The intention was to grow this to 80% to 90% in three to five years, the group said.
Finbond might consider a rights issue to fund its expansion, although this was not on the cards, CEO Willie van Aardt said. Finbond raised R1.1bn from shareholders in a rights issue in 2016, acquiring 171 short-term lending branches in Canada and the US.
The group’s target for North American earnings was aggressive, AlphaWealth fund manager Keith McLachlan said.
"Finbond are betting the house on their American expansion, not dipping their toes in the water," he said.
That there did not appear to be local buyers interested in these companies raised flags, suggesting that Finbond could be the "buyer of last resort", McLachlan said.
However, Van Aardt said that $45bn (R602bn) worth of short-term loans were extended in the US annually, making the market there several times larger than that in SA.
At December 2016, short-term loans accounted for just R2.9bn, or 0.17%, of SA’s consumer credit debtors book, according to figures from the National Credit Regulator.
FINBOND ARE BETTING THE HOUSE ON THEIR AMERICAN EXPANSION, NOT DIPPING THEIR TOES IN THE WATER.
Following the acquisition of Blake Enterprises, Finbond would have a presence in 16 US states, with 223 branches.
It would advance about $260m (R3.7bn) in short-term loans a year.
Blake Enterprises had 52 branches across Tennessee, Alabama, Louisiana, Oklahoma and Mississippi.
All of the businesses that Finbond had acquired had a minimum 20-year track record in North America, with extensive knowledge of the markets in which they operated, Van Aardt said.
The Blake family would hold the remaining 25% stake in Blake Enterprises.
Robert E Blake founded the company and his son Dwight is currently CE.
For the year to February 2017, Finbond’s profit after tax jumped 142.3% to R138.7m.
The group said in its annual financial statements that it planned to establish offices in Europe and the US in 2017.
The company’s share, although thinly traded, is up about 24% in 2017.