The Latitude Group Holdings Ltd (ASX: LFS) share price is rising after announcing it’s going to buy the fintech Symple.
Latitude to buy Symple
Financial player Latitude has announced a deal to buy Symple Loans for $200 million in a cash and shares deal.
The purchase is expected to accelerate growth in Latitude’s loan portfolio and reduce costs, with expected in-year synergies (starting in the second half of FY22) and growing to $32 million before tax in FY23. This equates to an increase of cash net profit of 9% on the average of analyst forecasts for FY23.
It’s going to be funded by 38.46 million Latitude shares at $2.60 per share and $100 million in cash. This is expected to add 5% to cash profit/earnings per share (EPS) compared to the average analyst forecast for FY23.
What is Symple?
Symple is a Melbourne-based personal lending fintech using advanced tech, analytics and risk-based pricing techniques to deliver simple digital experiences to customers and brokers, fast approvals and same day settlements.
It was founded in 2018 and has generated $53 million in loan receivables in two years in Australia and will commence writing personal loans in Canada next month.
How does Latitude plan to use the business?
Symple will become the lending platform for all Latitude personal and auto loans, approximately 160,000 customers and a $2.5 billion loan portfolio.
Latitude will leverage Symple’s platform to support its existing business and launch new products and build partnerships with other lenders. It will also expand its auto loans business into New Zealand and personal loans into Canada through Symple’s established North American operations.
Management comments
Latitude Managing Director and CEO Ahmed Fahour said: “This is an exciting and important opportunity for Latitude that will accelerate our growth plans. Symple’s scalable platform will enable Latitude to offer a wide range of products and product features in Australia and New Zealand, enter new geographies and significantly reduce costs while delivering superior customer and partner experiences.”
Summary thoughts on Latitude and the share price
Investors seem to like this deal for Latitude. Not only does it add to Latitude’s capabilities, but it also reduces its competition in the space. This seems to make quite a lot of sense. Time will tell if the company paid a good price or not.
I don’t normally look at financial businesses for my portfolio, though Latitude is an interesting one compared to the major ASX banks. There are other ASX dividend shares I’ve got my eyes on.
