Financial services technology solutions company Fiserv Inc. entered into a joint venture agreement with Warburg Pincus LLC, which will provide $395 million to invest in Fiserv’s Lending Solutions business, the companies announced in a joint press release Wednesday.
Fiserv will retain 45% share in the Lending Solutions division — which includes all of the automotive loan origination and servicing products — while the private-equity firm will acquire a 55% share. Fiserv estimates that 25% to 30% of all auto loan originations pass through its servicing platform.
“We have been looking for a period of time for different ways to further accelerate our auto business,” Charles Sutherland, vice president of product management, strategy, and Lending Solutions, told Auto Finance News. “For us, it’s about a focus on lending and having a partner that has a proven track record for growth.”
Warburg Pincus has a number of investments in the financial services industry including companies that touch the auto finance space, such as Chinese car rental company CAR Inc., Indian vehicle marketplace Car Trade, the credit ratings agency DBRS, and Santander Asset Management.
“With this partnership with Warburg, we found a mutual partner that’s interested in growing the auto finance market and bringing in the next generation of new ideas,” Sutherland said.
Some of those new innovations that Fiserv is “looking at” include emerging car subscription services and fleet management solutions, he said. However, there’s no one initiative that’s taking priority in the wake of this new line of capital, he added.
“We’re in discussions with clients and we see their desire to introduce more automation into the back office of auto financing,” Sutherland said. “That’s the next frontier.”
