Finstar Financial Group, the private equity firm founded by Russian billionaire Oleg Boyko, has acquired a majority stake in Prestamos Prima, a Spanish non-bank lender. The value of the deal was undisclosed, but the firm usually makes investments between $20m ($18.21m) and $200m.
“We have been very active in the fintech space, which is a real disruptor in the financial markets,” says Nicholas Jordan, chief executive at Finstar Financial Group. “We will continue to grow in this sector, particularly at the expense of the larger banks.”
The Spanish non-bank lender has three services: Prestamos Prima, which offers mortgage-backed loans, Cochego, which facilitates secured loans to car owners, and Twinero, a payday lender of nonsecured loans. In addition, the company recently launched Viventor, a platform that allows individuals to purchase stakes in loans issued by Prestamos Prima and Twinero. Investors can sell their stakes to other investors at a par, premium or discount in a secondary market.
“We have a substantial amount of products with a larger variety of type and geography that we can help Viventor to place onto their platform,” Jordan says. “This platform could extend well beyond Spain and other products in other European countries.”
Spanish payday lending services like Prestamos Prima’s Twinero have been criticized by consumer associations. Payday lenders operate in the country without the supervision of the Bank of Spain. And even though they have to be registered in the Health Ministry’s consumer sub-directorate, it is the responsibility of Spain’s regional governments to punish any abusive practices.
A spokesperson from Adicae, the Spanish association of bank users, says that payday lenders’ customers are often desperate for cash and do not read or are unable to understand the small print on the contracts, which charge “abusive” interest rates. The parents of a young man, for example, paid Ђ1,500 back on a Ђ100 loan, the spokesperson said.
Jordan says that nobody benefits from clients who borrow irresponsibly and that more than 50 per cent of the loan applications in Finstar’s portfolio companies are rejected. He argues that customers who use payday lending services efficiently build up a positive credit record and move up the credit curve, accessing better products with lower interest rates, larger amounts and improved terms.
In his view, the sector will continue to grow, particularly among cash-strapped millennials, who are eager for enjoyable experiences and dislike waiting. In just 15 minutes, they can have a loan using their smartphones.
Source: http://realdeals.eu.com/article/50411 (for registered users only)