Eight CapitalAnd here it is. GLTA
Propel Holdings Inc.’s US$71-million acquisition of QuidMarket, a leading U.K. digital direct lending platform focused on the short-term subprime consumer loan market, is “chock-full of synergies” and brings focus on its “global expansion ambitions,” according to Eight Capital analyst Adhir Kadve.
“We like the acquisition for several reasons,” he said..” Primarily, it is immediately accretive (5 per cent by our estimate). Secondly, it adds an asset with a tremendous synergy potential. Thirdly, it opens up yet another attractive avenue of profitable growth for Propel in an attractive jurisdiction.
“While shares are up nearly 120 per cent year-to-date, we continue to see several opportunities for growth, including the core U.S.-based lending operations, the Canadian FORA operations (now bolstered with the KOHO partnership), and a key re-rate catalyst in scaling the LaaS partnership.”
Noting the Toronto-based financial technology company’s loan book has historically been internally funded, Mr. Kadve sees the deal, which was followed by a $115-million equity offering, as “an immediate opportunity for Propel to introduce debt financing and be able to supercharge growth.”
“QuidMarket’s adjudication model has largely been paper-based and each loan was evaluated individually,” he said. “As Propel is able to integrate its AI-powered model, we see that also supporting a strong growth trajectory. Finally, we see several opportunities for new product development, including risk-based pricing programs and thus introducing graduation programs and sharing best practices, including new partnerships on marketing channels.”
Maintaining a “buy” rating for its shares, the analyst increased his target by $3 to $38. The current average is $34.80.