Australia's FlexiGroup has struck a deal to buy Fisher & Paykel Finance for NZ$315 million from the Haier owned Fisher & Paykel Appliances.
FlexiGroup's acting CEO David Stevens says the deal's "transformational" for FlexiGroup, creating the opportunity for a trans-Tasman interest free credit card offering and a combined group with A$2 billion of receivables.
F&P Finance operates the Q Card and Farmers Finance Card and has about 430,000 active cardholders. The deal requires the approval of the Overseas Investment Office and Reserve Bank of New Zealand, which is expected early in 2016.
"This is a transformational deal for FlexiGroup on many levels that positions us as one of the leading non-bank financial services providers across Australia and NZ. We have acquired a unique portfolio of card brands and strong partner relationships across numerous industries," said Stevens.
FlexiGroup says F&P Finance will be run as a standalone business as a "reporting segment" of FlexiGroup. Greg Shepherd will remain as F&P Finance's CEO. Consolidation of FlexiGroup and F&P Finance's operations creates an opportunity for "meaningful cost synergies" with more than $5.3 million worth expected before tax in the first full year of FlexiGroup's ownership of F&P Finance.
Shift to MasterCard
FlexiGroup says although F&P Finance has relationships with 21% of NZ cardholders, it only captures 2% of credit card spend. This, it says, creates a significant opportunity to increase share. It plans to migrate F&P Finance's cards from their existing closed loop structure to MasterCard to boost card acceptance across domestic, international and online merchants whilst retaining flexible long-term interest free finance options as a key card feature.
As of June 30 FlexiGroup says F&P Finance had receivables of $662 million and new business volumes of $617 million. F&P Finance chief financial officer Rhys Clark recently told interest.co.nz Q Card is growing receivables at 18% per annum.
FlexiGroup says F&P Finance's lenders have "unanimously approved" a change of control. The Auckland-based company uses bank loans from ANZ, BNZ and Westpac, retail deposits and receivables securitisation with institutional investors as its funding sources.
F&P Appliances announced in May that F&P Finance was on the block.