Toronto-based FinTech firm Propel Holdings has entered into an agreement to acquire United Kingdom-based FinTech lender QuidMarket to the tune of $95.9 million CAD ($71 million USD).
Based in Nottingham, England, QuidMarket offers an online lending solution that Propel said has originated over 310,000 loans to UK consumers since 2011. The all-cash deal is aimed at advancing Propel’s growth strategy and provide a foothold in the British market. The existing management team at QuidMarket will continue to operate the business going forward, according to Propel.
Founded in 2011, Propel offers an online lending platform that caters to consumers who are underserved by traditional financial institutions. The company says it uses artificial intelligence (AI) to assess customers’ creditworthiness and enable more informed lending decisions by analyzing vast amounts of data.
Propel went public on the Toronto Stock Exchange in 2021, raising $70 million through its public offering. On its website, the company claims it has given out over one million loans and facilitated over $1 billion in credit in the last 12 years.
Since going public in October 2021, Propel has expanded both its products and the areas it serves. It launched Fora Credit in Canada, formed partnerships in the United States to offer lending services through other companies, and recently teamed up with fellow Toronto-based FinTech company Koho to provide a new line of credit in Canada.
The latter partnership will see Koho introduce and manage the line of credit as one of the core lending products in its app. Propel will power the technology, underwriting, servicing, and funding of the loans, which will range between $1,000 and $15,000.
Propel has performed well on the TSX since its debut relative to other tech companies that went public during the pandemic. The company, which trades under the symbol ‘PRL’ traded at $27.89 at press time, up over 160 percent since October 2021.
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Propel reported that QuidMarket brought in roughly $27.7 million USD in revenue and earned approximately $9.6 million USD in net income for the twelve months ending June 30, 2024.
It appears Propel is eyeing more than just the British Isles. In a statement, the company noted that the UK offers it access to the broader European market.
“QuidMarket serves a market of more than 20 million underserved consumers in the UK where the demand for credit far exceeds supply,” Clive Kinross, CEO of Propel, said in a statement. “Backed by Propel’s AI-powered technology, financial and operational expertise, and capital resources, we believe QuidMarket will be able to accelerate its growth while broadening access to credit for more underserved consumers.”
Alongside the acquisition announcement, Propel disclosed that it has entered into a bought deal equity offering with a group of underwriters led by Canaccord Genuity Corp. and Scotia Capital Inc.
The underwriters have agreed to purchase 3.64 million subscription receipts at a price of $27.50 CAD each, generating gross proceeds of about $100 million CAD for the company. Propel said it plans to use the net proceeds to help fund the acquisition.
According to Propel, the acquisition’s purchase price reflects a multiple of about 740 percent of QuidMarket’s net income for the twelve months ending June 30, 2024. The acquisition is expected to close in the fourth quarter of 2024 or early in the first quarter of 2025.
UPDATE (11/15/2024): On Nov. 15, 2024, Propel Holdings announced the transaction had officially completed with a final purchase price of $71 million USD ($95.9 million CAD), all paid in cash, funded by the net proceeds of a $115 million CAD bought deal offering that closed in early October.
Feature image courtesy Unsplash. Photo by Fabian Bank.