Credito Real — an institution in Mexico that boasts five lines of business including used-vehicle installment contracts — announced on Wednesday that it acquired 65 percent of the equity interests issued by AFS Acceptance, a company that specializes in subprime auto financing.

Credito Real said it assumed a value $18 million for the 65 percent of equity interests issued by AFS Acceptance; a figure officials calculated was equal to a price-earnings multiple of five to six times this year’s recurrent earnings. As a result of the transaction, officials indicated Credito Real will consolidate AFS Acceptance’s results in its financial statements beginning this month.

Officials explained Credito Real and AFS Acceptance defined a business plan and established management incentives to achieve profit targets for future years. They added AFS Acceptance’s management team will continue to run the business and will keep a 35-percent stake in the company.

The president of AFS Acceptance is Scot Seagrave, who is vice president of the National Automotive Finance Association and one of the many panelists set to be a part of the SubPrime Forum during Used Car Week at the Phoenician in Scottsdale, Ariz., beginning on Nov. 16.

AFS Acceptance has been in business for more than 10 years originating subprime financing for used vehicles. Credito Real highlighted the four most valuable characteristics about AFS Acceptance that made it interested in this deal included:

— Its management team and actual owners have deep experience in the U.S. used-vehicle market in the USA as well as specific market intelligence regarding the Latin-American market

— Presence in 40 states with a network of more than 300 dealers

— Solid Hispanic market knowledge

— A sophisticated and proven process in place for collection, risk assessment and loan origination

Credito Real stated the main purpose of this transaction is to diversify its loan portfolio and to allow the company to gain access to a large used-vehicle loan platform to reach the Hispanic market in the United States, reinforcing its commitment to offer financial products to low and middle-income segments of the population historically underserved by other financial institutions.

Credito Real believes it will achieve two strategic objectives with the transaction.

The first goal is focused on boosting growth and diversification in the U.S. by serving the Hispanic market. Officials arrived at that objective since as of September AFS Acceptance had a loan portfolio of $74.5 million. Thus, the consolidated used-vehicle business will represent more than 10 percent of Credito Real’s total loan portfolio, up from a previous level of 4 percent.

The second strategic objective is associated with Credito Real saying it will be establishing a scalable business platform to complement its used-vehicle business model based in Dallas.

“By combining AFS Acceptance strengths with those of Credito Real, the deal will allow building a large distribution network, in consequence our used-car loan business for Hispanics with no credit history in Texas will be enhanced by adding new states to the network, setting the growth foundations for the years to come,” company officials said.

“Credito Real’s business model consistently continues to support loan portfolio expansion and diversification while keeping our focus on customers traditionally underserved by other financial institutions,” they went on say.