General Motors acquired AmeriCredit 11 years ago in a move that eventually led the formation of its new captive finance company at GM Financial.
Another domestic OEM is on the same path.
On Wednesday, Stellantis announced it has entered into a definitive agreement to acquire F1 Holdings Corp., parent company to First Investors Financial Services Group, a leading independent auto finance company that specializes in the subprime market — just like AmeriCredit.
According to a news release, the company formerly known as Fiat Chrysler plans to purchase First Investors through an all-cash transaction for approximately $285 million from an investor group led by Gallatin Point Capital and including affiliates of Jacobs Asset Management.
The company said the transaction is expected to close by the end of the year and is subject to customary closing conditions and regulatory approvals.
Stellantis explained that its strategic objective is to establish a U.S. captive finance company to support its sales and fully capitalize on its strong market position while creating long-term value for Stellantis shareholders. The company said the acquisition of First Investors allows Stellantis to create a platform from which to grow a full-service captive finance organization.
Stellantis pointed out that it is the only major OEM currently operating in the U.S. without a captive auto finance company. The company added that the transaction represents a “meaningful strategic opportunity, with significant potential for accretive earnings generation and improving customer loyalty.”
Stellantis went on to say that a captive finance company will enhance the ownership experience and connectivity in the digital age for customers who purchase Jeep, Ram, Dodge, Chrysler, Fiat and Alfa Romeo vehicles and provide future opportunities to enable emerging business strategies.
“This transaction marks a significant milestone in Stellantis’ sales finance strategy in the critical U.S. market,” Stellantis chief executive officer Carlos Tavares said in the news release. “First Investors has an outstanding financial and operational platform, underpinned by a strong management team, with vast experience in the auto finance space.
“Direct ownership of a finance company in the U.S. is a white-space opportunity which will allow Stellantis to provide our customers and dealers a complete range of financing options, including retail loans, leases, and floorplan financing in the near-to-medium term,” Tavares continued.
It’s definitely been a year of change at First Investors Financial Services Group.
In January, First Investors said the acquisition of the subprime auto finance company by funds affiliated with Gallatin Point Capital and minority investor Jacobs Asset Management had closed, following receipt of all required consents and regulatory approvals in a process that began during the previous fall.
While terms of that merger were not disclosed, but the announcement indicated a portion of the proceeds from the transaction were to serve to retire certain indebtedness of the company and provide additional working capital to grow and expand the company’s financing businesses as well as to accelerate its portfolio acquisition capabilities and third-party servicing segment.
At the time, First Investors noted that its executive management team had an average tenure of 17 years with the company.
And now those executives will be working with Stellantis.
“We are excited to join the Stellantis team,” First Investors president and CEO Tommy Moore Jr. said in Wednesday’s news release. “Becoming part of Stellantis provides long-term stability for our company and employees. We believe that there are significant untapped growth opportunities for First Investors under Stellantis ownership as we expand our product suite to support the auto sales growth of Stellantis.
“The First Investors management team is fully committed to ensuring a smooth and rapid integration into Stellantis. Meanwhile, we remain committed to continuing to offer our loans and services to our existing network of dealers and current business partners,” continued Moore, who was honored in 2017 as the Subprime Auto Finance Executive of the Year.
BofA Securities served as exclusive financial advisor and Sullivan & Cromwell as legal advisor to Stellantis. Ardea Partners served as exclusive financial advisor and Goodwin Procter as legal advisor to Gallatin Point.
Last month, National Auto Care (NAC) reinforced its executive team to prep for mergers and acquisitions.
On Tuesday, NAC showed why as senior vice president of mergers & acquisitions Courtney Hoffman announced acquisitions of five Midwest and West Coast agencies that further accelerate its growth strategy that focuses on partnering with like-minded, high-growth agents that value a team-oriented culture.
The five acquired agencies include:
—Profit Concepts
—Pinnacle Dealer Services
—Pritchard Insurance
—RRC Companies (RRC)
—Ace Financial Development Group (AFDG)
The announcement is made in partnership with the agencies’ principals, who include:
—Profit Concepts president Dave Griffiths
—Pinnacle Dealer Services owner Rod Watson and VP of sales Gene Patton
—Pritchard Insurance owner Dave Pritchard and president Greg Welch
—RRC Companies owner Rodney Porter
—Ace Financial Development Group president Tim Bartholomew
Profit Concepts was founded in 1979 as a general agency with a vision to help dealers maximize the profit of their sales, finance and service departments. Profit Concepts and NAC have a long history together, including in 2018 when the two companies collaborated to develop National Powersports Care, a line of protection products exclusively for powersports vehicles.
Pinnacle Dealer Services is an Arizona-based agency founded in 2008 that provides a full-suite of products to automotive, RV, powersports and marine dealers primarily in Arizona and to other accounts throughout the Southwest.
Pritchard Insurance is a family agency that has been providing services in the Pacific Northwest, including Washington, Oregon, Idaho, Alaska and Montana for more than 40 years.
RRC is an agency based in Oklahoma City covering dealers primarily on the West Coast and Midwest. The agency is led by Porter, who has been in F&I sales for the past 15 years.
AFDG is an agency based in Portage, Mich., covering auto dealers primarily in the Midwest. President Tim Bartholomew has more than 20 years of F&I experience.
According to a news release, the executive teams of each agency will continue to manage day-to-day operations of their offices with the added support of NAC’s products and claims management capabilities.
“Expansion on the West Coast is an important piece of our agency acquisition strategy,” Hoffman said in the news release. “These transactions enable us to continue to increase NAC’s current footprint in this market.
“We are excited about our future partnership with these agencies. People make the difference,” Hoffman continued.
NAC chief executive officer Tony Wanderon added, “It’s with great pride that we bring these agencies into the NAC Family knowing their history of forward-thinking innovation in the F&I space.”
The company pointed out that Griffiths will play a major role in NAC’s significant West Coast expansion plans.
“As a combined company, the opportunities for growth are immense as we join forces with NAC’s nationwide team,” Griffiths said. “The new systems, NAC team members, training for our dealers and new programs are all industry leading. National Auto Care’s generosity to both me and my employees will never be forgotten.”
Likewise, the company indicated the principals of Pinnacle Dealer Services, Pritchard Insurance, RRC Companies and AFDG each cited the people and culture at NAC as driving factors in their decision.
“We are genuinely excited about the possibilities and support provided by NAC and are continually impressed with the knowledge and expertise provided by their people,” Pritchard and Welch said in a joint statement, while Watson added, “What makes NAC stand out is the people and the atmosphere. They have outstanding products and technology, and we look forward to growing with their support.”
Allied Solutions recently expanded its portfolio of partnerships by aligning with Tracers and Illinois Bankers Business Services (IBBS).
On Tuesday, the provider of insurance, lending, risk management and data-enabled products to financial institutions broadened its portfolio again, but this time via what’s been a popular move so far this year — an acquisition.
According to a news release, Allied Solutions has acquired data modeling capabilities from Prescient Models, a global thought leader in data modeling.
Allied Solutions highlighted this acquisition provides financial institutions with “industry-leading” models to identify opportunities for strategic growth, risk management, portfolio and profitability initiatives and compliance.
Allied Solutions emphasized that it’s continuing to invest in data solutions that better equip financial institutions to grow, protect and evolve their businesses. With this new acquisition, the company said it can serve financial institutions of any size, including credit unions, community banks, finance companies, large banks, and international markets.
Allied Solutions chief strategy and technology officer David Hilger explained how crucial this move is for the company and clients.
“Our latest acquisition really moves the needle,” Hilger said in the news release. “The addition of Prescient Models’ capabilities builds on our investments in data, analytics, and digital transformation over the last several years. We see now more than ever our financial institution clients seeking better actionable insights as they evolve their organizations, allocate capital, and seek sound investment opportunities.
“This acquisition is pivotal for us at Allied, allowing us to deliver our clients a holistic enterprise approach to predictive models and one source of truth for profitability,” he added.
Allied Solutions went on to note that the Prescient Models acquisition goes beyond simple reporting and visualization that exist in the market today and transforms analytics into a strategic asset.
Built and supported by a team of PhDs, Prescient Models delivers patented, validated models that Allied Solutions said have been pressure-tested across the world.
“There is a lot of buzz in the market currently about predictive modeling, machine learning, and artificial intelligence. We have a long history of innovating and advancing these technologies that can help transform how financial institutions manage their business,” Prescient Models chief executive officer Joseph Breeden said in the news release.
“Our Scenario A.I. product leverages that latest technology to help organizations proactively identify risks and opportunities and act on them. Being part of the Allied family will really help us bring this game-changing technology to market faster,” Breeden went on to say.
Exeter Finance is changing hands from one investment firm to another that already has a robust automotive portfolio.
The finance company that specializes in the subprime market announced on Monday that it has entered into a definitive agreement to be acquired by an investor group led by Warburg Pincus from funds managed by Blackstone.
According to a news release, terms of the private transaction were not disclosed.
“We are thrilled to partner with the Warburg Pincus-led investor group as we enter this next phase of growth for Exeter. We have made tremendous progress under Blackstone’s ownership establishing Exeter as an industry leader, and I’m proud of the team’s solid execution,” Exeter chief executive officer Jason Grubb said in the news release.
Warburg Pincus is a long-time, active investor in the auto industry across a variety of verticals including finance companies, rental car providers, e-commerce distribution and software platforms.
The firm’s notable investments in the auto value chain include:
— Santander Consumer USA (SCUSA)
— China Auto Rental
— Au Financiers
— Uxin
— defi SOLUTIONS
— Cango
— Car Trade
“Exeter Finance is a pioneer in offering innovative financial solutions at scale across the credit spectrum. We have over a decade-long close and successful working relationship with this best-in-class management team and are looking forward to partnering with them again in Exeter Finance,” said Dan Zilberman, managing director and head of special situations at Warburg Pincus.
The news release indicated the transaction is expected to close by the end of the year and is subject to customary closing conditions.
Executives added that Grubb will remain as CEO and a meaningful investor in the company, alongside the current Exeter management team.
“We are excited to partner with Jason and the Exeter Finance team to further build on the company’s leading market position and accelerate future growth,” Warburg Pincus managing director Eric Friedman added.
Blackstone’s relationship with Exeter stretches back a decade when the investment firm acquired the finance company, pushing $277 million into the operation in August 2011. Since then, the company has grown by underwriting, purchasing, servicing and securitizing retail installment contracts from more than 11,000 dealers and 475,000 customers nationwide.
Citi served as the lead financial advisor for Exeter Finance and Blackstone, along with Barclays, Deutsche Bank and Wells Fargo. Skadden, Arps, Slate, Meagher & Flom LLP served as legal advisor to Exeter Finance and Blackstone.
J.P. Morgan served as financial advisor and Wachtell, Lipton, Rosen & Katz served as legal advisor to the acquirers.
June is proving to be acquisitions month.
Along with transactions involving dealer groups, auctions and digital retailing companies, Sedgwick — a leading global provider of technology-enabled risk, benefits and integrated business solutions — announced on Tuesday that it has acquired two regional automotive appraisal companies: Automotive Damage Appraisers of the Southwest (ADASW) and Metro Appraisal.
The company explained these strategic acquisitions expand the reach and scale of Sedgwick’s growing auto claims division in the U.S. as the company continues to invest in building premier, end-to-end solutions for clients.
Colleagues from both companies are now part of Sedgwick’s auto appraisal division, according to a news release.
“We are excited to announce these strategic acquisitions and expand our solutions and footprint in the auto appraisal space,” said Chris Bakes, Sedgwick managing director for auto appraisals.
“Adding ADASW and Metro to the Sedgwick family enhances our coast-to-coast auto solutions team and reflects our commitment to providing comprehensive, tech-driven claims solutions for our clients,” Bakes continued in the news release.
ADASW is a regional independent appraiser of damaged cars, heavy equipment and other vehicles. Founded in 1952, the company said ADASW’s strong presence in Colorado, New Mexico and Texas expands Sedgwick’s auto claim offerings in the Southwest.
“This partnership is a natural next step for the ADASW team; our long history serving customers in the Southwest region is well matched with Sedgwick’s global history in insurance claims,” ADASW president Barry Porter said. “We are thrilled to strengthen our combined network in the American Southwest and to become a part of the renowned Sedgwick organization.”
Metro Appraisal is one of the largest providers of independent auto appraisals in Florida. Founded in 1988 and based in the Tampa area, Metro and its team of more than 20 independent appraisers across Florida conduct approximately 50,000 damage appraisals each year.
“The Florida appraisal market is host to a wide range of vehicle claims types, stemming from our unpredictable and extreme weather and the high demand for construction,” Metro Appraisal president Scott Eskine said. “Our regional expertise, paired with Sedgwick’s national network of excellence in the claims space, will be the start of an exciting new chapter for the Metro team.”
Sedgwick expanded into the auto appraisal space last year with the acquisition of Nationwide Appraisals. Today, Sedgwick offers auto and heavy equipment appraisal solutions with cutting-edge technology and a coast-to-coast network of more than 1,000 independent appraisers.
More about Sedgwick’s auto appraisals solutions and services can be found at sedgwick.com/autoappraisals.
REPAY made a significant increase in its collections capabilities this week, announcing it has signed a definitive agreement to acquire BillingTree for approximately $503 million.
According to a news release, the acquisition will be financed with approximately $275 million in cash from REPAY’s balance sheet and $228 million in newly issued shares of REPAY Class A common stock to be issued to the seller.
The company said the transaction is subject to certain customary closing conditions and is expected to close by the end of the second quarter.
BillingTree, founded in 2003 and headquartered in Scottsdale, Ariz., is a leading provider of omni-channel, integrated payments solutions to the healthcare, credit union, accounts receivable management (ARM) and energy industries.
Through its technology-enabled suite of products and services, including a variety of payment channels and reporting capabilities, BillingTree helps organizations get paid faster and more efficiently.
“We are thrilled to announce this acquisition, our largest to date, and look forward to further expanding our position in healthcare, credit unions, and accounts receivable management with the help of BillingTree’s team and strong platform capabilities,” REPAY chief executive officer John Morris said in the news release. “BillingTree satisfies all of our acquisition investment criteria, including a large addressable market opportunity that is amid a shift away from legacy payment methods and towards the technology-first, industry-specific payment mediums in which BillingTree specializes.
“Additionally, BillingTree has strong recurring revenue streams, high customer retention, approximately 50 unique ISV integrations, an attractive financial profile, and numerous opportunities for synergy realization,” Morris continued. “We are looking forward to welcoming BillingTree into the REPAY family and together pursuing many amazing growth opportunities ahead.”
REPAY elaborated on how the BillingTree acquisition enhances scale and client diversification because of these elements:
— BillingTree serves more than 1,650 clients across multiple, attractive end markets with industry leading retention metrics
— BillingTree’s solutions are tightly integrated with more than 50 software platforms
— The acquisition is expected to increase REPAY’s total card payment volume to more than $20 billion on an annualized basis and expand REPAY’s software partner integrations to more than 175
“BillingTree’s unique approach has always been to develop strategic alliances with service, software, and billing providers resulting in full integrations that create seamless, compliant and innovative payment solutions,” Morris said. We believe that we are an ideal strategic partner for BillingTree, as we also go to market with a highly integrated, omni-channel approach.
“Together, we can capture more of the massive addressable market in payments and combine our incredible team members and technology to create simplified experiences for merchants across our collective, ever-expanding verticals,” Morris went on to say.
SWBC now possesses a stronger foothold in the auto-finance market through acquisition.
Last week, SWBC announced that it recently acquired the auto claims division of DIMONT, one of the largest providers of specialty insurance and loan administration services to the residential mortgage and auto finance industries based in Dallas.
The company highlighted this move allows SWBC to enrich its AutoPilot suite of software and services — insurance tracking, payment processing, collections and asset recovery — so that financial institutions can efficiently manage their loan portfolio risk and operations within one platform.
“We have been partners with DIMONT for years to provide a comprehensive claims recovery solution,” said Jeff Anderson, vice president of claims products for SWBC’s Financial Institution Group.
“With this acquisition, we have been able to bring the auto insurance claims processing under our roof and seamlessly integrate it with our AutoPilot platform,” Anderson continued in a news release.
The company went on to explain that acquiring the auto claims division helps provide stability and long-term growth with additional products and services under the SWBC umbrella that help auto portfolios grow.
In addition, SWBC said the technology will increase efficiency.
“DIMONT has been a valued partner of SWBC for over 15 years, and the company has built an amazing culture and operation centered around its customers. We are so thrilled about this transition and are excited to see the future of the auto-claims business with the SWBC team at the helm,” DIMONT chief executive officer Laura MacIntyre said in the news release.
“We are thankful to all of our clients for their support during this change of ownership, and we look forward to seeing this business prosper in the future,” MacIntyre added.
Clients that were utilizing DIMONT’s auto claims services have transitioned to SWBC, according to the company.
Here’s another update to start 2021 from our busy mergers and acquisitions desk.
Protective Life Corp., overseer of Protective Asset Protection and a wholly owned U.S. subsidiary of Dai-ichi Life Holdings, announced this week it completed the transaction to acquire the Revolos family of companies. Revolos offers a suite of F&I products, including vehicle service contracts, guaranteed asset protection (GAP) coverage and ancillary products serving the automotive, recreational vehicle and powersports industries.
Details that this transaction was coming first surfaced on Sept. 25. The culmination boosted M&A announcements the string of developments during the first week of the year from Cox Automotive, First Investors Financial Services and Sonsio.
“The closing of this transaction marks another milestone for Protective and an exciting new chapter in the growth of the Asset Protection Division,” Protective president and chief executive officer Richard Bielen said. “We are excited about the opportunity to expand our market reach and deliver valuable solutions to more customers by adding Revolos’ complementary product portfolio and distribution channels to our current business lines.”
Scott Karchunas, president of Protective’s Asset Protection Division added, “Both Revolos and Protective have built strong organizations with a focus on meeting the needs of agents and dealers. We are excited to welcome the Revolos team members to the Protective family. Together we can continue growing and protecting more customers.”
Protective Asset Protection has been providing F&I solutions to the industry for more than 55 years. Its programs include, among others, extended service contracts, GAP and ancillary products to protect consumers’ investments in automobiles, recreational vehicles, watercraft and powersports vehicles.
Protective Asset Protection also offers a portfolio of dealer participation programs, training and technology solutions through a network of general agents as well as a direct sales force.
“Revolos is a diversified, full-service F&I provider that offers a suite of products that complement Protective’s existing portfolio and distribution channels,” the company reiterated
This is the fifth acquisition completed since Protective became part of Dai-ichi in 2015.
“Dai-ichi considers Protective to be its North American growth platform and continues to aim for further expansion in the region, through both acquisitions and organic growth in Protective’s retail sales,” the company said.
Maynard, Cooper & Gale acted as external legal counsel for Protective in this transaction.
Reed Smith served as external legal counsel for Revolos, and Houlihan Lokey was the financial advisor to Revolos in this transaction.
The new year is opening with mergers coming to fruition.
On the heels of a development involving First Investors Financial Services, Sonsio, a leading provider of vehicle protection and warranty programs to the automotive aftermarket, announced its merger with Evolution, Dent Wizard’s F&I vehicle protection division.
The merger, which was effective Jan. 1, creates one of the largest providers of services, expertise, experience and geographic reach in the vehicle protection and warranty markets in North America. The combined company will operate under the Sonsio Vehicle Protection brand.
According to a news release, Sonsio president and chief executive officer David Jones will remain CEO of the newly integrated company. Lindsey Bird, the division president of Evolution, will serve as the president of Sonsio.
With this union, the company said it will have customer service locations in Denver, Phoenix and St. Louis. Additionally, Sonsio will continue to service its appearance protection products through Dent Wizard’s network of technicians.
Together, the combined organizations said they will serve more than 74,000 locations across all 50 states, Canada, and Puerto Rico. Sonsio indicated that it will now be able to deliver a more extensive lineup of protection products for both new and aftermarket vehicles, increasing the company’s ability to drive value to partners through improved customer retention, new customer acquisition and increased profitability.
“Many of our relationships stretch out five, 10 and (more than) 20 years. We credit this longevity to our ability to quickly and expertly adjudicate claims, manage risk, and customize solutions to help our partners achieve their goals,” Jones said in the news release. “With our newly expanded organization, we will be able to offer an even more robust range of solutions to the marketplace.”
Bird added, “We could not be more excited about the future. The merger of these companies will allow us to expand our resources to better serve both our existing and future customers, dealers, and consumers with the highest level of customer satisfaction, attention to detail, and quality services.”
A merger Financial Services Group first revealed in October now is closed, according to an announcement on Tuesday.
First Investors said the acquisition of the subprime auto finance company by funds affiliated with Gallatin Point Capital and minority investor Jacobs Asset Management closed on Thursday, following receipt of all required consents and regulatory approvals.
Terms of the merger were not disclosed, but the announcement indicated a portion of the proceeds from the transaction will serve to retire certain indebtedness of the company and provide additional working capital to grow and expand the company’s financing businesses as well as to accelerate its portfolio acquisition capabilities and third-party servicing segment.
First Investors also noted that the executive management team — with an average tenure of 17 years with the company — is expected to remain in place.
“We are excited to close the merger transaction which will allow the management team to resume its strategy of prudently growing organic originations in business segments that provide us with attractive risk-adjusted returns while strategically looking for opportunities to expand our lending partnerships, pursue portfolio acquisition opportunities, and establish third-party servicing relationships,” said First Investors president and chief executive officer Tommy Moore Jr., who was honored during 2017 Used Car Week as the Subprime Auto Finance Executive of the Year.
Gallatin Point co-founder and managing partner Matt Botein shared his perspectives about the merger closing.
“First Investors has an outstanding financial and operational track record and a distinguished reputation for how it conducts its business,” Botein said. “We are very excited to partner with its strong management team to accelerate growth opportunities and enhance First Investors’ capacity to deliver value to its customers.”
And Jacobs Asset Management founder and managing partner Sy Jacobs added, “It is great to be working with Gallatin Point and the same management team I so admired and enjoyed working with during my 10 years on the board while the company was publicly-traded.”
Credit Suisse Securities (USA) served as exclusive financial advisor and Willkie Farr & Gallagher acted as legal advisor to First Investors.
Wells Fargo Securities served as exclusive financial advisor and Goodwin Procter acted as legal advisor to Gallatin Point and the investor group.
