LEXPERT MAGAZINE
|
APRIL/MAY 2017 11
POINT-OF-SALE lender Financeit start-
ed off in 2011 servicing a market (small
and mid-size business owners) that the big
banks wouldn't touch in the wake of the fi-
nancial crisis. Now Financeit has closed its
first acquisition — from one of those very
same banks. e company formed a lend-
ing partnership with Concentra in April
2016, and announced its $339-million
acquisition of TD Bank Group's indirect
home improvement financing assets a scant
six months later. at deal included pur-
chasing 800 merchant-dealer agreements
— including retailers like Home Hard-
ware. Once the dust settles on the transi-
tion, which involved staged closings and
migrating data from two distinct IT sys-
tems, Financeit will service around 45,000
existing TD consumer loans.
In an environment where agile fintechs
are increasingly partnering up with exist-
ing financial institutions, collaboration was
key. Peter Epp of Financeit, Jason Magid of
Concentra and Gus Karantzoulis, a BLG
partner with extensive experience in lend-
ing, give us a look at how it all went down.
LEXPERT: We hear a lot about big banks
acquiring assets from fintechs but not the
other way around. How did this transac-
tion come about?
Peter Epp (Executive VP and GC, Financeit):
We had been seeking a significant oppor-
tunity to advance our goal of becoming the
#1 home improvement financing provider
in Canada and this acquisition presented
an important stepping stone that helped us
move into the fast lane. I need to give credit
to our CEO Michael Garrity for, of course,
together with Concentra, identifying —
and driving us to complete! — this really
synergistic solution.
Jason Magid (VP, Legal Counsel, Concen-
tra Bank): Concentra and Financeit had
already established a strategic partner-
ship, which facilitated Financeit's national
growth strategy and our objective of ex-
panding the wholesale financing solutions
and investments it provides credit unions.
So when the opportunity to acquire TD's
portfolio presented itself — as TD wanted
to focus on core strengths and streamline
efficiencies — it was a natural extension of
the pre-existing relationship between the
parties. We also viewed this as an opportu-
nity to accelerate business strategy to seek
growth within the consumer financing
market and diversify.
LEXPERT: Why was it important for Finan-
ceit to have a partner like Concentra?
Epp: As this was a pioneering transaction, it
was important for us to strategically collab-
orate with an established player like Con-
centra. We saw the potential to introduce
the benefits of the Financeit solution to
credit unions and caisses populaires across
Canada, in turn enabling our merchant
The Role Reversal
partners nationwide to take advantage of
our cloud-based platform for secure, point-
of-sale lending to consumers from any web-
enabled device, including instant online
credit decisions as well as paperless in-field
loan origination through to end-of-loan
lifecycle servicing.
Magid: Both parties bring complementary
strengths to their collaboration. Financeit
provides Concentra with access to a supe-
rior point-of-sale financing platform and
immediate access to an asset class where,
historically, the credit union sector has
been under-represented. With Concentra's
lending capital, Financeit significantly in-
creases its origination capacity and access
to the credit union system.
LEXPERT: Fintechs have generally ben-
efited from a lower level of regulation than
banks, right?
Gus Karantzoulis (Borden Ladner Gervais
LLP, for Concentra Bank): Yes, that's right.
However, these types of strategic partner-
ships force fintechs to meet the higher
regulatory standards of the lenders backing
them. is transaction was no different.
Epp: TD and Concentra are subject to
the myriad regulations that govern OSFI-
regulated financial institutions, many of
which, as a loan originator and servicing
agent of Concentra and other banks, we
also need to observe. In our own right,
Financeit is also subject to, and we needed
to ensure compliance with, among other
things, consumer protection legislation
right across the country and privacy and
anti-spam regulations.
LEXPERT: How would you characterize the
negotiations? e transition?
Epp: We certainly had some interesting
and challenging issues — both commercial
Financeit and Concentra Bank acquired a business unit of TD. A unique model is born
INTERVIEW BY GENA SMITH
Peter
Epp
EVP,
General
Counsel,
Financeit
Jason
Magid
VP,
Legal
Counsel,
Concentra
Bank
Gus
Karantzoulis
Borden
Ladner Gervais
LLP (for
Concentra
Bank)
ON THE DEAL
