Latitude buys Symple for $ 200 million in personal loans
This is Latitude’s first acquisition since listing on ASX in April at a valuation of $ 2.67 billion. Its shares responded positively to the trade and rose 5% to $ 2.40 after an hour of trading.
Latitude said it would transfer its existing auto and personal loan business to Symple technology, describing it as scalable globally and cheaper to operate. The deal would generate $ 28 million in annual cost synergies as Latitude decommission its legacy technology systems.
The deal will also see Latitude expand to personal loans in Canada, where Symple will soon begin lending, and launch variable rate personal loans (so far it has only lent at fixed rates).
Latitude’s Mr Fahour said the deal would accelerate growth plans and allow it “to offer a wider range of products and product features in Australia and New Zealand” to its 2.8 million customers . Mr. Fahour said the speed of Symple’s technology was particularly appealing.
“The strategic issue of time-to-yes and time-to-cash has been around since the 1980s, even when I was a young whippersnapper working with BCG,” said Mr. Fahour.
“If you look at what Symple has to offer, they can give you a quote in two minutes, you can process a request in seven minutes, you can get a response in 60 seconds, and you can complete it digitally in a day. “
Symple was co-founded in 2018 by former ANZ bankers Bob Belan, who was ANZ’s general manager of consumer finance, and its former head of personal loans, Paul Byrne. The National Australia Bank provided wholesale funding to Symple. The founders of Symple and a team of 20 people join Latitude.
The deal shows Latitude wants to tackle not only the big banks and regional banks, which have pulled out of personal lending over the past decade, but also the new group of fintech personal lenders, including SocietyOne, Plenti, Wisr and Harmoney. Latitude’s presentation posted to ASX on Monday morning showed that Symple’s relative performance was increasing faster than SocietyOne, Plenti and Wisr.
Analysts said the deal shows established players looking to buy fintech-developed technologies rather than building them themselves. “Reading here is the value of fintech origination and service platforms and that they are way ahead of the competition,” Shaw said. & Partner Analyst Jonathon Higgins. “Latitude and traditional incumbents seem well behind and buy without iterating. “
Mr Fahour dismissed comparisons with incumbents where IT projects “usually end in tears” and start-ups where employees sport “fancy t-shirts.” Latitude was in a middle position with a sizable company, experienced executives and good growth opportunities.
“What we do is not marketing. These are responsible and thoughtful loans to clients who are making important decisions in their lives, ”said Mr. Fahour.
Symple has built a cloud-based loan assessment platform that allows it to target prices based on the borrower’s risk at a wider range of interest rates than those offered by banks with settlement. the same day. Symple’s interest rates range from 5.75% to 25.99% on loans between $ 5,000 and $ 50,000.
When it raised funds in February, Symple was valued at over $ 100 million, two years after it started lending. It made $ 5.4 million in revenue in fiscal 2021 and issued $ 41 million in new loans. Its loan portfolio at the end of June stood at $ 53 million.
Latitude has $ 2.5 billion in personal and auto loans for 160,000 customers in Australia and New Zealand. It increased its market share to 12%, up from 9% in 2017.
Two-thirds of Latitude is owned by a group that bought the company in 2015 comprising KKR, Värde Partners and Deutsche Bank.
Latitude was advised by Bank of America and King & Wooden trunks.
Latitude was hit by the pandemic with reduced demand and higher costs and its cash profit for fiscal 2020 fell 18% to $ 223.9 million. It will release the half-yearly figures on August 23.