Axis Auto Finance, a Canadian used-vehicle lender that provides auto finance options to roughly 30% of Canadians, will acquire Cars On Credit Financial Inc. for approximately $11 million in cash.
The value is subject to possible downward adjustments with respect to book value on closing of the transaction and losses on the 2017 vintage of receivables, according to an Axis press release.
Cars on Credit is a Canadian independent, nonprime auto finance company founded in 2006, and since inception has originated more than $120 million in loans and leases, with more than 400 active used-car dealers in its network. The company has a geographic focus in Ontario and the Maritimes, and as of Sept. 30, 2017, had finance receivables totaling approximately $32 million.
The transaction between the two companies will more than double Axis Auto Finance’s portfolio to nearly $60 million, according to the release.
In 2017, Axis grew its originations by $13.5 million in a nine-month period — a 43% increase compared with the same time the previous year. Axis Auto Finance will also assume two securitization facilities with Canadian Schedule 1 banks through the acquisition, increasing and diversifying its funding capabilities.
“Cars On Credit embraces all the values important to Axis: disciplined underwriting, great customer service, as well as fiscal responsibility, and we are excited to combine the two businesses into the largest publicly traded subprime auto lender in Canada,” said Ilja Troitschanski, president of Axis Auto Finance.“This acquisition represents the first step in the execution of our growth-by-acquisition strategy in the Canadian subprime auto lending market.”
Axis previously acquired Verdant Financial Partners I Inc. in July of 2016, a deal which allowed them to go public without the traditional initial public offering.
Axis Auto Finance’s acquisition of Cars on Credit is subject to customary closing deals including regulatory approval, and is expected to close around Jan. 31.
