IRVING, Texas — To help the company ramp up to a national platform, Exeter Finance Corp. revealed it is being acquired by Blackstone, a leading investment and advisory firm with about $159 billion in assets.

This acquisition has helped Exeter nail down a $600 million credit line to bolster business and take its platform national. This is a significant increase from the $150 million credit facility Wells Fargo provided in November.

The investment firm revealed it will be investing $277 million in the transaction, while the Exeter management team will hold onto a minority interest in Exeter. The management team at Exeter will not change, according to the company's chief executive officer.

 "Having Blackstone as our financial partner not only gives Exeter the ability to expand our platform nationwide, but it also gives us flexibility. When the market conditions are right, we can be aggressive with our growth. But when it's time to slow things down, we have a partner who understands the value of being patient. Blackstone's financial strength has also enabled us to structure a credit facility that gives Exeter significant funding capacity and the ability to manage through the turbulent economic cycles in the future," Mark Floyd, CEO, explained to SubPrime Auto Finance News this week.

Blackstone is purchasing Exeter from Navigation Capital Partners, and Floyd said this new deal makes him even more confident about his company's future.

"Management quality and depth of experience were obviously important factors Blackstone considered before making the decision to acquire Exeter. I'm confident we've got the right management team to lead Exeter to a new level of growth, and I'm looking forward to bringing in additional management talent as we expand our national footprint," Floyd said.  

While the company already does business in 28 states through 24 branch offices, Floyd was cryptic about which states Exeter could enter next.

"We focus on attractive geographic areas that have well-established dealer communities, and we identify experienced managers who know the market and have established relationships with those dealers," he highlighted.

The company primarily works with franchised dealers (97 percent of business), but it also does business with a select group of independent dealers (about 3 percent of business).

As for inventory requirements, Floyd explained, "We focus our efforts on acquiring contracts collateralized by late-model used (93 percent) and to a lesser extent, new motor vehicle contracts (7 percent)."

For dealers interested in understanding how Exeter works, Floyd said the company uses a decentralized originations platform.

"We staff branch offices in local markets with credit officers and funders who support dealer relationships throughout the lending process. By being on the ground in targeted markets, dealers enjoy personalized service from the Exeter branch employees they know and trust," he told SubPrime Auto Finance News.

"Exeter's branch staff actively seeks out quality dealers in their market. Our website includes branch locations and phone numbers. Dealers can call branches in their areas, or they can contact Exeter by email or phone through the ‘Dealer Inquiries' information on our website," he added.

Martin Brand, a managing director of Blackstone, said, "Exeter has a tremendous franchise and differentiates itself in the industry with its service excellence and professionalism. We're looking forward to working with Exeter's outstanding management team as we grow the company."

So with analysts calling for the possibility of a double-dip recession, what does Floyd see for the future of the subprime industry?

"Subprime portfolios performed very well through the last economic downturn and continue to perform well as we work our way through the current anemic recovery," he responded. "When the capital markets were paralyzed in 2008 and 2009, companies with strong balance sheets and dependable bank partners were able to withstand that cycle and actually prosper. Depending on what data you look at, 30 to 40 percent of the U.S. population is considered subprime, and I expect to see that range remain fairly consistent going forward. The subprime auto finance industry has gone through some tough economic cycles over the years but has emerged as an industry that has better-management, is more sophisticated, more disciplined and stronger than ever."

He went on to tell SubPrime Auto Finance News, "We all know that when competitive pressure is more intense, there is a temptation in the market to loosen up on sound underwriting which leads to poor performance. Exeter maintains a disciplined approach to underwriting policies and procedures and will not compromise credit quality for the sake of growth. I think most lenders take the same approach as we're seeing rational competition from a credit quality perspective, and this bodes well for the industry.

"Although recent data indicate approval rates are up in the subprime segment, I expect underwriting to remain fairly tight for the foreseeable future," Floyd concluded.

Exeter was founded in 2006 and reached $200 million in total originations in May, nearly doubling these over the last year. It also currently has more than $140 million in managed receivables.

In 2008, the company was acquired by NCP, which subsequently made equity investments in the company that helped establish and grow its initial branch network and credit capabilities, according to management.

Larry Mock, board director of Exeter and managing partner of NCP, pointed out, "Exeter's business platform, credit discipline and talented staff have enabled the company to not only survive during a difficult financial environment, but also grow substantially since the company's inception in 2006."

For more information on Exeter, or for dealers looking to establish relationship, visit www.exeterfinance.com.