Fair is in discussion with a “major global financial institution” for as much as $500 million of debt funding, Co-Founder Georg Bauer told Auto Finance News. To date, the 3-year-old vehicle subscription company has raised $1.5 billion in funding over nine rounds.
“Once this [funding] is closed, we are picking up our work with the rating agencies and working on preparing for an ABS structure,” Bauer said. The Santa Monica, Calif.-based startup expects to make its foray into the securitization market in late 2020.
With an eye toward global expansion, Bauer said the next step on the ABS-front is to continue to monitor international markets in addition to the U.S. market. Longer term, Fair will continue its work educating industry players on its entirely new asset class. “Not everybody will get it or buy into it because the cash flow, despite some of our robust assumptions, is not an entirely predictive cash flow and that’s what we’re working on,” Bauer said. “Funding isn’t everything, but without it there is nothing.”
Read more about Fair’s ABS strategy here.
Fair started the process of establishing its first ABS transaction in the fall of 2018. Technically, Fair is similar to traditional lease companies in terms of putting cars, the underlying assets, as securities into a Fair-titled trust. The only difference, Bauer explained, is that the maturity is flexible. The structures have already been put in place so, operationally, the company is ready, he said.
