Vancouver-based Mogo Finance Technology announced today that it has finalized an agreement with Fortress Credit Co LLC. Fortress Credit is part of Fortress Investment Group LLC’s Credit Funds business, which invests globally in credit and assets. The agreement covers a new expandable revolving credit facility of up to $200 million, and will be used to finance the expansion of Mogo’s consumer installment loans of up to $35,000, known as MogoLiquid.
Dave Feller, Mogo’s founder and CEO, explained to BetaKit that what separates MogoLiquid from traditional loan methods is its proprietary credit risk algorithm, which has the ability to go beyond traditional credit bureau scores and take into account thousands of data points, allowing Mogo to offer consumers immediate savings. “One of the unique things about our solution is that we offer consumers across the full credit spectrum the opportunity to lower their cost of credit and get out of debt faster compared to their existing alternatives,” said Feller. “Given its attractive rates and simplicity, MogoLiquid is particularly appealing to the approximately 17 million prime consumers in Canada – the largest segment of the market.”
The new facility has an initial commitment of $50 million and can be expanded under certain conditions up to $200 million with an initial effective rate of 9.5 percent. If the new facility is increased beyond $100 million, the incremental portion of the facility would have an effective rate of 8.5 percent, based on today’s LIBOR, for the first $50 million, and an effective rate of 7.9 percent for the second $50 million.
“The new facility substantially increases the capital available to support the continued growth of our installment loans, while significantly lowering our cost of capital,” said Greg Feller, president and CFO of Mogo. “With the two credit facilities we now have in place, we have up to $250 million in available loan capital to grow our portfolio.”
The announcement comes shortly after Mogo reported its second quarter 2015 results with loan originations up 137 percent, and revenue increasing by 122 percent. Just a few months ago, Mogo raised $50 million after completing its IPO.