the Latitude Group Holdings Ltd. [ASX:LFS] the share price is up today after the acquisition of Symple Loans for $ 200 million.
As of this writing, shares of LFS were trading at $ 2.40 per share, up 4.80%.
Latitude’s expansion plans
Latitude said the acquisition of Symple Loans, a Melbourne-based financial technology company, would drive Latitude’s growth in segments such as personal loans. This market has seen tremendous growth for brokerage firms over the past few months.
Symple will become the lending platform for all Latitude personal and auto loans.
With approximately 160,000 customers backed by a $ 2.5 billion loan portfolio, Latitude will leverage Symple’s sophisticated platform to support its existing business and aims to initiate and partner with other lenders.
Latitude also plans to expand its auto loan business in New Zealand and personal loan business in Canada through Symple’s established North American operations.
In short, Latitude’s decision to acquire Symple was strategic.
The final transaction will be funded by the issuance or delivery of 38.46 million Latitude shares at $ 2.60 per share and $ 100 million in cash.
Latitude Managing Director and CEO Ahmed Fahour expressed his positive opinion:
‘This is an exciting and important opportunity for Latitude that will accelerate our growth plans.
‘Symple’s scalable platform will allow Latitude to offer a wider range of products and product features in Australia and New Zealand, enter new geographies and significantly reduce costs while providing superior customer and partner experience.‘
Latitude 1H21 commercial update
In addition to the acquisition announced today, Latitude also recently released its 1:21 business update.
Latitude’s lending volumes for the six-month period ended June 30 are expected to be $ 3.7 billion.
This is an overall increase of 7%, with personal loan volumes up 25% in Australia and 50% in New Zealand compared to 1H20.
The company notes:
‘This growth in volume is despite the fact that the international and travel category is down 46% in 1H20 and 74% compared to 2019 due to border closures.‘
On the other hand, gross receivables on loans are expected to remain stable from 2H20 levels at $ 6.5 billion.
This is mainly due to prepayments from customers in response to the government’s cash stimulus and lower spending.
Costs are expected to decrease by 10% compared to the previous corresponding period (PCP), while accounting credit quality continues to improve strongly with net charges likely to decrease by 40% on PCP.
As a result of these expectations and forecasts, Latitude expects Net Income After Tax (NPAT) of between $ 115 million and $ 120 million for the six months ending June 30, 2021.
Outlook Sharing for Latitude
With strong expansion plans supported by solid future projections, Latitude aims to carve out a competitive position in the FinTech industry.
These expansion plans may also have contributed to the market auction of LFS shares today.
The acquisition of Symple Loans will give Latitude the opportunity to further capture a growing market.
For example, the global FinTech market is expected to grow and reach a market value of approximately $ 324 billion by 2026.
Optimistic investors are hopeful that the acquisition announced today will position Latitude well in an industry that is only expected to grow.
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