CORRECTION: Mogo Finance acquires Sebo Credit SRL – Invitation to conference call on 15 July 2020, 16:00 CET
More than 50% from equity investors in Mogo Group and Sebo overlap, however according to IAS 24 both companies before transaction did not qualify as related parties.
Mogo Finance group, one of largest European used car finance groups, has just acquired 5th largest (measured by total assets) non-banking credit organizations in Moldova – Sebo Credit SRL.
The acquisition is part of Mogo group‘s efforts to maintain its position as a leading consumer finance services provider in Moldova, one of Mogo group‘s most promising mid-tier markets to date.
Mogo Finance group will use part of the recently accumulated free cash by paying EUR 2.9 million to acquire 100% of Sebo Credit SRL common shares, hence Sebo and its Net Loan portfolio in the amount of EUR 15.9 million (as at 30 June 2020) will be fully consolidated within the Mogo Finance group as well as become one of the guarantors and pledgors according to the Terms and Conditions of the EUR 100m senior secured Eurobonds (XS1831877755). By doing so this will substantially strengthen the security package of the Eurobonds.
There are a lot of positive synergies between Mogo in Moldova and Sebo as both businesses are expected to benefit from a closer collaboration while being part of a Mogo group:
- Cross selling and upselling to a large customer base
- Administrative and operating cost optimizations
- Expand both companies physical presence immediately
- Funding costs optimizations
Sebo is 5th largest non-banking financial services provider operating in Moldova since 2017, with a database of more than 250 000 customers and significant offline footprint (especially in the regions where mogo so far was not present). The company also is a trusted financing partner for consumer electronics in the country.
Sebo offers consumer loans with the maximum term of the loans of 48 months and maximum amount of EUR 1 500. Apart from widespread physical branch network it has invested EUR 1.4 million in both online and offline marketing to become a top of the mind brand in consumer finance in Moldova.
According to the audited annual statements prepared according to the International Financial Reporting Standards, Sebo had following main financial indicators in FY 2019:
- Net profit of EUR 4.1m (EUR 1.9m in FY 2018)
- EBITDA of EUR 7.9m (EUR 3.2m in FY 2018)
- Net portfolio of EUR 20.0 (EUR 9.9m as at the end of FY 2018)
As evidenced by the results above, the acquisition is expected to significantly strengthen the profitability and subsequently also capitalization of the Mogo Group.
About the acquisition
Sebo, similar to other lending companies, was significantly affected by the recent lockdowns as well as moratorium recommendations introduced by the The National Bank of Moldova.
Sebo’s parent company found it harder to continue supporting Sebo’s growth to the extent needed for the company to regain its financial stability in the aftermath of Covid-19 and continue successful business development in Moldova. In search of alternatives, Sebo’s parent company has come to the decision to sell Sebo to Mogo group. Both Mogo and Finko group teams have worked very closely over the past several months to see the acquisition come to its completion.
With significant experience in the Moldovan market and diversified funding structures, Mogo is well positioned to take over Sebo. Leveraging existing synergies and scale efficiencies, Mogo group plans to optimize existing Sebo business by continuing to adapt the company to the post-Covid-19 reality and re-establish Sebo operations.
Post-acquisition Sebo will continue to operate within a standalone legal entity and continue to use its already well established and well regarded brand name. Sebo’s own proprietary IT systems will continue to be used for the operating purposes and Sebo’s results will be reported within the consolidated results of Mogo Group separately from Mogo’s secured used car finance business. These actions together with the extensive due diligence and the fact that both company’s have closely followed each other for few years now, make the integration risk remote.
Mogo CEO’s comment
Modestas Sudnius, Mogo Finance group CEO: “We are excited to be able to acquire such a well-managed business with a strong team and wide-spread presence in the country.
With Sebo joining Mogo Finance group we will significantly strengthen our position in one of our most promising markets – Moldova, and will be able to offer Moldovan consumers a full set of non-bank financial services. We see a lot of positive synergies between Mogo in Moldova and Sebo as both businesses are expected to benefit from a closer collaboration while being part of a Mogo group.
The acquisition of already established and profitable business is a differently strategy to the organic growth and several years of investment before a market turns to monthly profitability that was prevalent in the recent years. Smart and profitable capital allocation is key in the times when uncertainty of consumers, capital markets and possible repeated lockdowns is high. This is exactly what Mogo is doing with the acquisition of a profitable and well established business that is expected to bring immediate positive impact to the Eurobonds security package as well as Mogo Group’s financial results.“
CEO Modestas Sudnius and CFO Maris Kreics will comment on the recent Mogo Finance developments. The conference call will be held in English.
Please register http://emea.directeventreg.com/registration/9651514
About Mogo group
Mogo Finance is one of the largest and fastest-growing secured used car financing companies in Europe. Recognizing the niche in used car financing underserved by traditional lenders, Mogo Finance has expanded its operations to 17 countries issuing over EUR 550 million up to date and running a net loan and used car rent portfolio over EUR 196 million. Mogo offers secured loans up to EUR 15,000 with maximum tenor of 84 months making used car financing process convenient, both for its customers and partners. Wide geographical presence makes Mogo unique over its rivals and diversifies revenue streams.
Mogo Finance operates through its own branch network, more than 2,000 partner locations and strong online presence. Physical footprint makes Mogo Finance top of mind brand in used car financing. Established in 2012, headquartered in Riga, Latvia Mogo Finance operates in: Latvia, Estonia, Lithuania, Georgia, Poland, Romania, Bulgaria, Moldova, Albania, Belarus, Armenia, Uzbekistan, Kazakhstan, North Macedonia, Bosnia and Herzegovina, Kenya and Uganda.