The investment firm that oversees two subprime auto finance companies — Flagship Credit Acceptance and CarFinance Capital — announced on Thursday that it is merging the two operations together.

Officials from the alternative asset management unit of Perella Weinberg Partners explained the combined company now will total assets in excess of $2 billion.

“Since forming Flagship and CarFinance, we have been pleased with the performance and strong execution of both companies,” said David Schiff, partner at Perella Weinberg Partners and portfolio manager of the asset based value strategy. “Together, the two companies will create a top-tier independent auto finance company with enhanced scale, lower cost of capital, superior cost controls and more efficient access to the capital markets.

“Most importantly, the combination will better position these companies to provide a critical segment of the population access to credit in a first-class, fair, professional, and transparent manner,” Schiff continued. “We are confident that the combined company will continue to have industry-leading standards and will achieve greater success than either Flagship or CarFinance could on a standalone basis.”

Michael Ritter, chief executive officer of Flagship, will become the CEO of the combined company.

“Combining with CarFinance at this point in the companies’ growth cycles will create a leading automotive finance company with increased scale and greater flexibility,” Ritter said. “Importantly, as a combined company, we will be able to better serve our dealer base through our existing brands and products and continue to provide essential financing to under-served consumers so that they can procure transportation to perform necessary daily needs.

“I look forward to working closely with my new partners at CarFinance and our sponsors at ABV to realize the full potential of the combined company,” Ritter added.

Schiff also commented on behalf of the board of directors of CarFinance.

“I would like to thank Jim Landy for his valuable contributions in establishing CarFinance as a leading indirect and direct lender to the auto finance industry,” Schiff said. “We partnered with two of the strongest and most accomplished management teams in the sector in Flagship and CarFinance, and we appreciate their efforts in creating two of the most successful players in the space.

“We look forward to working with Jim and Mike as we bring together these two complementary platforms,” Schiff went on to say.

Since their inceptions, Flagship and CarFinance have each established well-recognized and accepted term asset-backed securitization programs obtaining ratings from multiple nationally recognized rating agencies. Each has also entered into bank warehouse facilities from some of the most prominent financial institutions in the world.

Perella Weinberg Partners believes the combined company will be a leading, independent auto finance company with an enhanced national presence and wide geographic diversity. 

On a combined basis the platforms currently originate approximately $1.2 billion of annual volume and employ approximately 600 employees.

Headquartered in Chadds Ford, Pa., with operational offices in Irvine, Calif., Phoenix, and Irving, Texas, Perella Weinberg Partners highlighted the combined company will benefit from a network of more than 7,700 dealers nationwide, as well as from an active direct lending division that is “helping to transform the auto financing experience.”

Perella Weinberg Partners added that the consummation of the merger is subject to the receipt of certain regulatory approvals and other customary closing conditions for a transaction of this type.