The stalwart fintechs will combine multiple synergies to become a seriously dominant possibly earthshaking player in Australia’s sophisticated  fintech lending market.

MoneyMe (ASX:MME) surprised markets this morning – nay, disrupted them – confirming the acquisition of industry disruptor SocietyOne in a $132m deal.

The combined group instantly transforms MME into a major player in the fast-growing fintech lending industry, starting with a near 75% increase in the size of its loan book to within sight of $1bn.

The acquisition is also expected to generate a 63% lift in MME’s annualised revenues to $146m, with more than $15m of cost synergies through the medium-term.

The deal’s historic significance within Australia’s fintech landscape is undeniable. On a day when broader markets fell and anxious investors jumped ship, MME began the day 4% higher and the stock continues to pull focus, despite heavy losses all-round.

 

Scale-up plans

MoneyMe CEO Clayton Howes says along with a pumped-up loan book, the combined group will benefit by leveraging the relative strength of both companies.

“The SocietyOne acquisition combines two of the most widely recognised consumer credit disruptors to deliver immediate scale advantages and incremental revenue opportunities,” Howes said.

Among the early integrations, MoneyMe will incorporate the Society One credit score product while also exploring further opportunities from its Banking-as-a-Service partnership with Westpac.

Both companies also offer complementary distribution partnerships “that will span across direct digital, direct traditional, broker, agent and dealer, as well as delivering improved data and funding opportunities”.

 

SocietyOne

A pioneer in Australia’s disruptive fintech lending sector, SocietyOne’s been there from the start building a leading, recognised brand with a pro forma loan book valued at $392m as at the end of November.

The company boasts some 25,000 active loan customers and another 147,000 customers who engage with its credit score wellness product.

SocOne generated annual revenues of around $50m in FY21 and is backed by a syndicate of major shareholders including Seven West Media, Australian Capital Equity, News Corporation and Westpac’s venture capital arm Reinventure.

 

Synergies and scale

Among the key strategic pillars of the deal is the fact MoneyMe will boast a significantly expanded balance sheet and loan book, giving it market leverage to further scale up its operations with a cheaper cost of funding.

Along with improved funding costs, further cost savings are expected to be generated through the removal of duplicate functions, systems, premises and processes.

In addition, both companies will pursue cross-selling opportunities, such as the introduction of the SocietyOne customer base to MoneyMe’s Horizon platform which reduces funding time for consumer loans from one to two days to just a few hours.

The combined group will also be able to explore the expanded broker channels generated across both distribution platforms.

It can also leverage the increased scale to generate improved data insights around consumer behaviour, resulting in improved credit risk management and targeted marketing opportunities.

  

Deal terms

Under the terms of the transaction, SocietyOne shareholders will be offered up to 75.2m MoneyMe shares, in a predominantly share-based deal which values the company at around $132m based on MME’s last traded price.

A cash component will be offered, but capped at a maximum of 7.5% of all SocietyOne shareholders and a total dollar value of $9.7m.

To date, shareholders representing 79% of SocietyOne have signed the MIA and 78% have elected to receive the share-based consideration, MME said.

Based on the amount of cash offers taken up, the deal will see SocietyOne shareholders own between 28.9% and 30.5% of the combined group.

Ultimately, the merger “combines SocietyOne’s leading brand recognition as a pioneer in disruptive personal lending and unfolding ecosystem for financial wellness, with MoneyMe’s leadership in product innovation and proprietary technology platform (Horizon),” MME said.

The combined business will be a powerful force in the market with leading customer experience with the objective of accelerating the pace of winning market share from incumbent lenders.

This article was developed in collaboration with MoneyMe, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

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