London-based PremFina, a provider of insurance premium financing options and white-label software solutions for insurance brokers, is actively looking at targets to acquire to accelerate the growth of the company, Chief Executive Officer and Founder Bundeep Singh Rangar said. The company is also interested in partnering up in collaboration agreements, he added.
The company is only active in the UK market, but is looking at expanding into Europe, India and the US, Rangar said. Europe is high on the company’s agenda, with the business looking to expand into the region in the next 12 months organically or via an acquisition, he added.
PremFina is most interested in expanding into France, Spain or Poland, he said. The company is talking to targets in those countries, as well as communicating with broker networks in each of those jurisdictions to build its go-to-market strategy, he added.
In terms of targets, obvious candidates to acquire or collaborate with are those actively involved in the premium finance sector, he said. Therefore, the company is looking at rivals, subsidiaries of larger. Financial groups involved in premium finance, and lending companies that have regulatory approval and understand the market dynamics of premium finance, although may not be directly active in the space, he added.
The size of the targets is not that relevant, he said, as the company has not spent much of the USD 36m it raised in October last year. Moreover, the company has investors with “deep pockets” so that for the right deal PremFina could raise the necessary funds from its backers, he added.
A combination of cash and shares will finance any acquisitions made, he said, declining to disclose its financials.
Rangar, Rakuten Capital and Draper Esprit [LON:GROW] are the company’s largest shareholders, followed by Talis Capital, Thomvest Ventures, Emery Capital and Rubicon Venture Capital, he said.
In October last year, PremFina announced it had secured USD 36m in capital via a growth round and debt facility led by Rakuten Capital, the investment division of Japan-based e-commerce company Rakuten [TYO:4755], and UK-based Draper Esprit.
The capital raised is aimed at boosting PremFina’s presence in the UK market, allowing the company to hire more staff, as well as fund its loan book and its inorganic overseas expansion plans, he said.
Depending on the pace of growth and its international expansion plans, the company will look to raise additional capital at some point next year, he said. No formal process is underway at this stage, he added.
Another area of interest for the company is blockchain, he said. PremFina is interested in how the technology can make financing more efficient and is exploring how to use the technology in its business, he added.
When a consumer or business purchases insurance from a broker and wishes to make payments on a monthly basis, PremFina pays the broker upfront and collects the monthly repayments from the end consumer, applying a financing charge on top, he said. The company makes insurance more affordable by breaking down the cost of insurance, he added.
PremFina’s largest competitor in the sector is Cinven-owned Premium Credit Ltd (PCL), he said. It is the “gorilla” in the premium finance market with more than GBP 3.6bn in annual loans, he added.
The second largest player in the space is UK-based merchant bank Close Brothers Premium Finance, closely followed by France-based banking group BNP Paribas [EPA:BNP], he said.
The major difference between PremFina and its rivals, he explained, is that the company offers large and mid-sized brokers a white-label SaaS software solution that allows them to use their own funds to finance loan agreements, he said. Therefore, a broker can finance loan agreements itself and any overflow that its balance sheet cannot handle can be provided by PremFina, he added.
The company counts Saga among its clients, he said.
The premium finance market is large in Australia and North America, but still in relative infancy, he said, with the market valued at around USD 3bn in each jurisdiction. The UK market for premium finance is arguably the largest and most mature, valued at around GBP 9bn (USD 12.4bn), he added.
by Aaran Fronda in London
B I D D E R S
Draper Esprit PLC
Countries: France; Germany; India; Italy; Poland; Spain; USA; United Kingdom; States;
Sectors: Computer; Software; Financial Services
Sub-Sectors: Application; Software; Products; Insurance related; Software; Development; Systems; Integration;
Topics: Acquisition; Finance; Bolt; on/Opportunistic; Cross Border; Market Entry; Private equity related
Article originally published in Mergermarket: