Plenti’s expertise in funding consumer loans is paying off, with the pricing this week of a $280 million asset-back securities (ABS) transaction covering its renewable energy and personal loan receivables.

Fintech lender Plenti (ASX:PLT) has secured another major funding deal on favourable terms that will help the company reduce interest costs, improve its bottom line and free up equity to fund future growth.

Plenti CEO Daniel Foggo told Stockhead the $280 million ABS priced personal and renewable energy loan transaction, known as the Plenti PL-Green ABS 2022-1, will substantially reduce Plenti’s funding costs.

The group’s profit margins are driven by the interest revenue generated from its loan-book, offset against the cost of funding those loans.

“This transaction allows us to save around 1% on funding costs across $280 million loans, so it means a lot for us in terms of our bottom line,” Foggo said.

“It’s a positive development for our company in terms of lowering our funding costs and improving cash flow generation.”


Increase cash flow

When Plenti funds loans out of a bank warehouse, the company must also fund a portion of those loans with its own equity.

But the ABS structure will reduce its equity requirements, releasing capital back to the business to fund further loan book growth.

“The ABS transaction has allowed us to reduce our equity contribution to 2.5% of the underlying loans, giving us more ammunition to continue to grow our loan book.” he said.

It’s the second ABS structure Plenti has completed, following its inaugural ABS transaction in August last year, when it completed a $306.3m transaction backed by secured automotive loans.


Investor support for renewables lending

Foggo said despite recent volatile markets their latest ABS package had attracted strong support both domestically and internationally.

“It was done in a volatile market given what has been going on in the world, so we were delighted to attract such significant demand for this transaction,” Foggo said.

Foggo said $65 million of notes in Plenti’s latest ABS package were green-certified under the Climate Bonds Standard, which helped attract investors. He also noted that 76% of the notes are rated Aaa by Moody’s, reflecting the strength of the underlying credit.

“There’s been a lot of talk around investment in renewable energy assets and talk of investors voting with their money and pleasingly it is this demand for green assets which helped to make this a such a successful transaction.”

The ABS transaction has been funded by 15 investors, up from 14 on Plenti’s 2021 automotive ABS transaction.

“It’s good to see some new investors come on board and within that we attracted investment from Europe and Japan along with domestic investors.”


Finance partner of choice for energy retailers

Plenti has entered partnerships with AGL Energy and Energy Australia to offer interest-free loans and drive uptake of solar and battery technology.

It is also negotiating deals with other major retailers and positioning to become the financing partner of choice for Australian energy retailers, helping their customers transition to home solar and battery systems.

Plenti represents an ideal partner for energy retailers looking to make the lending process as simple as possible. Energy costs can be bundled together with solar-battery system finance provided as zero interest loans, delivering an innovative and streamlined solution where customers’ needs are met with just one payment plan.

It’s been a positive few months for Plenti, which has recorded a string of record results and reached its target – ahead of forecast – of a $1bn loan book late last year.

With a current run-rate of over $100 million a month, the company now has an ambition of reaching a $5bn loan book by 2025.


This article was developed in collaboration with Plenti, 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.