Pepper Group has announced that Pepper’s Spanish subsidiary, Pepper Spain will form a 50/50 Joint Venture with Spanish Bank, Banco Popular.
This joint venture will focus on the Spanish unsecured consumer finance market, and over time, pursue new opportunities together in Europe, Asia and the Americas focusing on consumer finance.
Banco Popular is the 6th largest banking group in Spain, with total assets of €160bn and 4.8m clients in 17 countries.
The combined business will have a total loan book outstanding of approximately $404 million as of 31 December 2015, making it the 5th largest player in the Spanish Point-of-Sale (“PoS”) Finance market and will have access to Banco Popular’s extensive customer base.
Banco Popular will take an initial 5% equity stake in Pepper Group and will provide Pepper with a committed, 5 year, $100m equity funding facility to support future growth.
The JV will combine the proven management expertise of both organisations in the unsecured consumer finance market, and also leverages the core strengths of both businesses. These include Pepper Group's proven cross-sell expertise in the origination of larger-ticket, higher yielding Personal Loans to existing PoS Finance customers with strong repayment and performance histories and Popular’s extensive retail branch network and embedded customer base across Spain. The combined business will also have a complementary national network of PoS merchants across a diverse range of industry segments such as electro, furniture, optical, bedding, dental and beauty.
A long term distribution agreement has been established between the two companies to support the origination of market leading unsecured consumer lending products via Popular’s branch network and customer database along with Pepper Group’s state of the art origination platform.
"We genuinely believe that the combination of Pepper Group and Popular will create a consumer finance powerhouse in Spain”, said Patrick Tuttle, Pepper Group's Co-Group Chief Executive Officer. "This joint venture will combine Pepper Group's market-leading point-of-sale technology and proven personal loan cross-sell expertise, with Popular's deep merchant relationships, branch and customer networks, and highly efficient funding platform in the Spanish market", he added.
Mike Culhane, Co-Group Chief Executive added: "This deal also demonstrates to Pepper Group's shareholders the embedded value we have been able to create in the geographically diverse consumer lending and loan servicing platforms which we have established in large consumer markets like Spain.”
According to Tuttle: "Popular's decision to select Pepper Group as the bank's preferred consumer finance partner in the point-of-sale finance and personal loan segments speaks volumes for the quality of our business and our senior management expertise, not only in the Spanish market but also globally given the intended international reach of our joint venture agreement".
Outside of Spain, we are also incredibly excited about the potential for our newly-formed joint venture to acquire or establish new consumer finance platforms in new markets across Europe, Asia and the Americas which are either underserved by existing providers or where we see opportunities to generate strong risk-adjusted returns in niche consumer finance segments", said Mike Culhane, Pepper Group's Co-Group Chief Executive Officer.
The JV is subject to certain conditions precedent being met, including Bank of Spain approval and certain funding conditions.
For more information please contact:
Corporate Affairs Manager
Pepper Group Limited
Ph (612) 9463 4675