Tuesday, November 4, 2014

Correcting an Error: BB&T Sold Lendmark

Correcting an Error:  BB&T Sold Lendmark

In my column on Sunday about the personal loan industry, I made an error.[1]  I said that Lendmark Financial Services is owned by BB&T.  Late last year, BB&T sold the business to The Blackstone Group for approximately $550 million.  A spokesperson for BB&T drew my attention to the error and indicated that the bank had, among other unspecified reasons, not been comfortable owning the business.  I regret the error.

However, Blackstone’s acquisition of Lendmark only serves to reinforce the point I made in the column.  In doing some follow up research on my error, I learned that Warburg Pincus, another private equity firm, acquired Mariner Finance, another personal loan company.  Lending to the working poor and military is very lucrative business and has become even more attractive as legislatures loosened lending terms.

I’d expect that we will see more private equity sponsors acquire these kinds of consumer finance businesses.  Aside from the attractive fundamentals, this industry seems amenable to further consolidation. Private equity firms love building platforms by doing “bolt-on” acquisitions.  In addition, by controlling a consumer finance business, private equity will have a captive source of high yield product for its credit funds.  Meanwhile Blackstone, Warburg, and other PE firms will have a solid niche within which to deploy public pension money.  Everyone wins, except the poor folks on the other end of the loans.

[1] http://www.newsobserver.com/2014/11/01/4277829_andrew-silton-legislators-coddle.html?rh=1

No comments:

Post a Comment