FlexiGroup announces biggest acquisition to date with NZ$315m deal for F&P Finance

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FlexiGroup Limited, one of the biggest consumer business financiers in Australia via leases and interest free loans, has announced the acquisition of New Zealand’s Fisher & Paykel Finance (“F&P Finance”) for NZ$315 million – marking its biggest acquisition to date.
 
Sydney-based FlexiGroup said it will pay $250 million in cash upfront plus a $65 million deferred consideration, including vendor finance, for the Auckland-based finance business. The conditions of the deal required FlexiGroup to raise $150 million from its shareholders and increase its corporate debt facility from $100m to $187.5m.
 
F&P Finance is primarily a no-interest credit card business centred around its QCard and Farmers Finance Card, which are offered via its retailer partners. Many of these are the same household names FlexiGroup sells cards through in Australia, including Dick Smith, Flight Centre and JB Hi-Fi. Once complete in the first half of 2016, FlexiGroup’s retail credit card business will make up close to 40% of FlexiGroup’s revenue, up from 21%. Its consumer leasing arm will reduce to about 7% of revenue. When the company listed in 2006, this accounted for about 80%.
 
F&P Finance is owned by whiteware manufacturer Fisher & Paykel Appliances, which was acquired by Chinese home goods maker Haier in 2012. In April, Fisher & Paykel Appliances reported a full-year loss of $12.6 million for the 2014 calendar year, an improvement on the $31 million loss it reported a year earlier. The acquisition price is 8.8 times F&P Finance’s pro-forma 2015 cash net profit after tax, taking into account expected synergies under FlexiGroup’s ownership and 2.9 times book value. 

Michael Harrod, Partner of Mayne Wetherell, commented: “Mayne Wetherell was delighted to assist FlexiGroup on what is a key transaction for FlexiGroup’s expansion in New Zealand.  A number of the aspects of the transaction involved the use of exciting and innovative deal technology, including the issuance of a highly structured note to partially fund the purchase price.  We have previously acted for FlexiGroup on its acquisitions of Equico and Telecom Rentals and are supportive of FlexiGroup’s growth and acquisition ambitions.”