Benzinga | Feb 1, 2021 06:06AM EST

CURO To Acquire Flexiti For $121M

Cash at close of $85 million; earn-out of $36 million

-- Flexiti, founded in 2013, is a leading provider of point-of-sale ("POS") consumer financing solutions in Canada with the market-leading omni-channel FinTech platform

-- Provides CURO instant capability and scale opportunity in Canada's credit card and POS financing markets

-- Flexiti's omni-channel buy-now-pay-later ("BNPL") solution is available in nearly 6,000 retail locations and e-commerce sites across Canada

-- Enhances CURO's long-term growth, financial and risk profiles

WICHITA, Kan.--(BUSINESS WIRE)-- CURO Group Holdings Corp. (NYSE:CURO) ("CURO"), a market leader in providing credit to non-prime consumers, today announced it has entered into an agreement to acquire Flexiti Financial Inc. ("Flexiti"), an emerging growth Canadian POS/BNPL provider. Under the terms of the agreement, CURO will acquire Flexiti for cash at closing of $85 million. The transaction also includes contingent consideration of up to $36 million based on the achievement of risk-adjusted revenue and origination targets over the next two years.

The acquisition of Flexiti further diversifies CURO's revenue mix by product and geography and accesses the full spectrum of Canadian consumers by adding an established omni-channel private label credit card platform and POS financing capabilities. Flexiti primarily serves prime consumers and the combination presents significant revenue and earnings growth opportunities by using CURO's expertise to expand Flexiti's non-prime product offerings. The transaction also provides the opportunity to leverage CURO's loan servicing experience to improve Flexiti's profit margins. The combination of CURO and Flexiti brings together two complementary businesses with like-minded management teams to serve prime and non-prime Canadian consumers directly or at the POS. In connection with the transaction, Flexiti refinanced and expanded its nonrecourse asset-backed warehouse financing facility from $296 million to $390 million.

Flexiti, one of Canada's fastest growing companies, is a privately-held POS lender headquartered in Toronto, offering customers flexible payment plans at retailers that sell goods such as furniture, appliances, jewelry and electronics. Flexiti is experiencing strong growth with originations increasing from C$49 million in 2017 to over C$290 million in 2020. Through the company's award-winning BNPL platform and proprietary technology, customers can be approved instantly to shop with their FlexitiCard, which they can use online or in-store to make multiple purchases, within their credit limit, without needing to reapply. In 2020, Flexiti was recognized by The Globe and Mail (Canada's Fastest Growing Companies-- ranked 6th), Canadian Business (Growth List -- ranked 3rd), Deloitte (Technology Fast 50 TM -- ranked 6th) and The Financial Times (The Americas' Fastest Growing Companies -- ranked 29th, 2nd in Canada).

"Flexiti is one of Canada's fastest-growing BNPL providers with a market-leading omni-channel FinTech platform. This acquisition serves as an important milestone for CURO's continued value creation in Canada allowing the company to serve customers across all channels and with an expanded product set," said Don Gayhardt, President and Chief Executive Officer of CURO. "CURO has been focused on M&A opportunities that align with our key strategic growth areas in Canada and cards, and this acquisition accelerates our progress on both fronts. Beyond the compelling strategic rationale and enhancements this transaction brings to our long-term growth strategy, Flexiti is a strong cultural fit for CURO. Credit risk management is a core competency for both companies that seek to optimize the balance between growth and prudent credit risk management to maximize long-term profitability. Both companies structure their businesses around the value of the omni-channel model, and continually enhance their product suites to best meet the evolving needs of their customers. Flexiti's management team and technology are first-rate and the company is well-positioned to execute on a strategic plan that calls for continued rapid origination growth. I'm excited to welcome Flexiti to the CURO team and look forward to creating value for all of our stakeholders."

Peter Kalen, founder and CEO of Flexiti, said, "Flexiti continues to grow at a rapid rate and this transaction will enable us to accelerate our growth trajectory. I am tremendously proud of the success that Flexiti has achieved in its seven years of operations and I have no doubt we are better positioned than ever to provide great BNPL offerings to our retail partners and cardholders. Through this acquisition, Flexiti will leverage CURO's financial strength, lending expertise and leadership across the credit spectrum to strengthen Flexiti's position as a leading Canadian BNPL solution provider."