Vancouver-based FinTech Mogo has announced a three-year lending partnership with alternative financing provider goeasy. The partnership deal comes five months after the two companies announced a pilot program for a personal loan offering.
“The sale of our MogoLiquid Portfolio significantly strengthens our financial position.”
– Greg Feller, president and CFO, Mogo
Mogo also announced it has sold the majority of its MogoLiquid loan portfolio to goeasy for $31.9 million. MogoLiquid is Mogo’s digital personal loan offering, allowing consumers to take loans up to $35,000. MogoLiquid has generated approximately $3 million in total revenue for the three month period ending September 30, 2019, according to Mogo. Mogo noted that it will be eligible for an additional performance-based payment of up to $1.5 million over the term of the agreement upon achieving certain agreed upon loan origination amounts.
The proceeds of the sale will be used to repay one of Mogo’s credit facilities, which has an outstanding balance of approximately $28.7 million. The remainder of the proceeds will be used to strengthen Mogo’s balance sheet and support its growth initiatives.
“On the back of a very successful initial implementation, we’re pleased to solidify a longer-term relationship with goeasy, which we view as the ideal non-prime partner for us given their deep experience in the consumer lending space and strong financial resources,” said David Feller, founder and CEO of Mogo.
The new partnership builds on Mogo and goeasy’s pilot program that was designed to allow consumers to download the Mogo app, receive a no-obligation pre-approval for up to $35,000 with terms of up to 5 years, customize their loans, and complete the loan agreement. Once approved, goeasy’s operating division, easyfinancial, will be responsible for funding unsecured and secured non-prime consumers’ loans.
Easyfinancial’s unsecured and secured personal lending products target the millions of Canadians with non-prime credit. Goeasy has initiated more than $3.9 billion in loans and recently surpassed a $1 billion consumer loan portfolio. The company also invested $34 million in growth equity into another Canadian FinTech startup, PayBright, in September.
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Under the terms of the agreement with goeasy, Mogo will continue to receive compensation for any loans funded by goeasy, while goeasy will have ownership of these loans. The partnership will also allow Mogo to generate additional fee-based subscription and services revenue.
Founded in 2003, Mogo offers personal loans, fraud protection solutions, mortgages, a Visa debit card, and credit scores through Equifax, to Canada’s millennial demographic. The startup has launched several new financial products over the past two years, including a gamified mortgage management platform, a cryptocurrency offering, and its Mogo Account and iOS app.
Mogo made a number of new announcements in the past year, including a partnership with digital benefits platform League, a merger with Difference Capital Financial, and that it opened more than 200,000 new member accounts last year.
Mogo noted it will continue to offer its MogoMini loan products under the MogoMoney brand and is in active discussions to bring on a prime lender to its digital lending platform.
“The sale of our MogoLiquid Portfolio significantly strengthens our financial position, providing additional cash while reducing our leverage, funding interest expense, and credit risk exposure,” said Greg Feller, president and CFO of Mogo. “This relationship, as well as others we expect to enter for the prime segment, allows us to more fully monetize the valuable proprietary lending platform we have built over the past 10 years.”