As part of the planned shutdown of Holden by owner General Motors, lending company Money3 (ASX: MNY) has acquired a $23 million loan book from the automaker on Holden purchases over the last two years at just a fraction of the book’s value.
The tack-on acquisition which will have minimal labour expense will shift the portfolio consisting of approximately 700 vehicles from General Motors Financial Australia, to Money3 which will purchase the portfolio for $17m – a 26% discount on the book value.
“Money3 continues to leverage its strengths in collections with the acquisition of approximately 700 customers of prime credit quality that purchased a new vehicle through a Holden dealership,” said Money3 Managing Director, Scott Baldwin.
“It demonstrates the group’s ability to acquire customers either organically or through portfolio acquisitions.”
“There are no staff or complicated transition processes needed for this acquisition as all outstanding commitments will roll into the existing Customer Care team deploying capital immediately with customer repayment patterns aligning nicely with the cash requirements of the business in 2021.”
Money3 currently has a further $350m of undrawn credit funding which the Company will look to deploy through organic growth or portfolio acquisitions like this General Motors addition.
As specialists in vehicle financing across both Australia and New Zealand, Money3 has been delivering strong results over the past 12 months having benefited from interest in vehicle loans at a time when COVID-19 has adversely affected public transport use.
Subsequently, Money3 has flagged an upgrade to its full year guidance for FY20 where it is expecting to deliver NPAT around $36m, an increase from their previous $34m guidance.
Last week, Money3 closed an oversubscribed Share Purchase Plan, raising $7m from shareholders after planning to raise just $5m.
In February 2020, General Motors announced the closure of Holden and its brand in Australia after 160 years in operation
Alfred Chan is an Analyst at Emerald Financial, specialising in ASX-listed small cap companies.
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