Latitude Group acquires fintech Symple for $200 million

Symple is a personal lending fintech that is set to begin writing loans in Canada as soon as next month

Latitude Group has paid $200 million for the personal lender Symple, as the non-bank lender makes a more aggressive push into the $11 billion personal loan market to take on the major banks.

Melbourne-based Symple is a personal lending fintech with a $53 million loan book that is set to begin writing loans in Canada as soon as next month.

Latitude CEO Ahmed Fahour said the deal would allow the company to roll its existing loan book onto Symple’s technology and retire a system that was built in the late 1990s.

It’s all about the tech, the platform, the technology. Once we have that I can turn off all the antiquated systems in my shop, Mr Fahour said. The cost benefit all comes out of decommissioning, turning off and shutting down something that was built 20 years ago.

Latitude, the fourth-largest personal lender with a 12 per cent share of the market, said it would issue $100 million in stock at $2.60 a share and pay $100 million in cash. The acquisition price multiple represents 37 times Symple’s 2021 revenue.

It’s the first acquisition for Latitude since it listed on the ASX in April at a $2.67 billion valuation. Following the deal, its shares rose 5 per cent at $2.40 after an hour of trading.

Latitude said it would roll its existing car loan and personal loan business onto the Symple technology, describing it as being globally scalable and lower cost to run. The deal would deliver $28 million in annual cost synergies as Latitude decommissions its old technology systems.

The deal will also see Latitude expand into personal lending in Canada, where Symple’ will begin lending soon, and see Latitude launch variable rate personal lending.

Latitude’s Mr Fahour said the deal would accelerate growth plans and allow it to offer a wider range of products and product features in Australia and New Zealand to its 2.8 million customers. Mr Fahour said the speed of Symple’s technology was especially attractive.

The strategic question of time-to-yes and time-to-cash has been around since the 1980s, even when I was a young whippersnapper working with BCG, Mr Fahour said.

If you look at what Symple offer they can give you a quote in two minutes, you can have an application processed in seven minutes, you can get a response to that in 60 seconds and you can fulfil that digitally within a day, he said.

Analysts said the deal shows established players are looking to buy technology developed by fintechs rather than build it themselves.

The read through here is the value in fintech origination and servicing platforms and that they are far ahead of the competition, said Shaw &Partners analyst Jonathon Higgins. Latitude and traditional incumbents appear well behind the curve and are buying not iterating.

Latitude occupied a middle ground with a sizeable business, experienced executives and good opportunities for growth.

What we do is not marketing. This is responsible and thoughtful lending to customers making important life decisions, Mr Fahour said.

Latitude was advised by Bank of America and King & Wood Mallesons.