Post by
retiredcf on Jun 28, 2022 8:32am
CIBC
Have a $180.00 target. GLTA
EQUITY RESEARCH
June 27, 2022 Flash Research
GOEASY LTD.
Equity Investment Facilitates Expanded Distribution Through
Point-of-sale Channel
Our Take: It appears that the primary objective of the partnership and
investment in Canada Drives is to expand the funnel of larger-ticket loan
applications for LendCare. We consider this partnership to be a source of
customer acquisition, and that the strategic investment simply strengthens
the commercial relationship between the two entities. The investment is
minor, both relative to GSY’s market capitalization and funding capacity. We
see obvious similarities with the previous PayBright partnership, and would
not be surprised to see other investments of this nature in the future to
expand distribution through the point-of-sale channel.
Key Takeaways
• Announces Partnership And Investment In Canada Drives:
goeasy announced that it has entered into a commercial partnership
and agreed to make a minority investment of $40 million in Canada
Drives (a Canadian online car shopping platform). The company
indicated that Canada Drives has been an exclusive online lead
generation partner for the past eight years and has referred nearly
100,000 customers to easyfinancial. The equity investment is
relatively minor, amounting to 2.5% of goeasy’s market
capitalization. At the end of Q1/22, goeasy had approximately $800
million in total funding capacity.
• Clear Similarities With The Previous PayBright Partnership: In
2019, goeasy announced a similar partnership and equity investment
in PayBright (a Canadian fintech focused on point-of-sale consumer
financing). PayBright was subsequently sold to Affirm, but the intent
of the partnership was to create a strong commercial relationship
and expand the funnel of loan applications. Our initial read on the
partnership and investment in Canada Drives is that it shares many
similarities in the sense that the primary objective is customer
acquisition as opposed to generating a return on the minority equity
investment (although that may occur over time as it did with
PayBright).