Consumer Finance Industry Update May 2014

Transcription

1 Integrity Expertise Results John Hill (813) John McDonald (813) Keith Hodgdon Senior Vice President (813) Consumer Finance Industry Update May 2014 Jami Gold Vice President (813) Michael Mariani Associate (813) Charlie Hendrick Senior Analyst (813) Hyde Park Capital Advisors, LLC 701 N. Franklin Street Tampa, FL Tel: Member FINRA/SIPC

2 Consumer Finance Capital Markets Commentary Stock Price Performance (LTM) As of May 30, 2014 the public market performance of the Consumer Finance industry s sectors varied over the trailing 12 month period. Only Auto Finance (up 13%) delivered positive returns, while both Household Products Finance (down 2%) and Consumer Finance (down 16%) performed poorly. 130% 120% 110% 15.2% 12.8% As detailed in the table below, a number of equity offerings were completed in the Consumer Finance industry during the past year. The U.S. Treasury Department raised over $2.3 billion as part of Ally Financial, Inc. s (NYSE:ALLY) IPO in April, reducing its stake in the Company from 37% to 17%. A few notable private placements were announced in the Consumer Finance industry, including Aequitas Capital Management s $110 million investment in Freedom Financial Network, LLC. Select Equity Offerings 100% 90% 80% 70% May 13 Aug 13 Nov 13 Feb 14 May 14 S&P 500 Consumer Finance Auto Finance Household Products Finance ($ in millions) ($ in millions) Transaction Transaction Announced Offer Date Issuer Type Value Date Target Lead Investor(s) 04/09/14 Ally Financial, Inc. IPO $2,375 01/22/14 Santander Consumer USA Holdings, Inc. IPO $1,800 Select Private Placements 1.6% 16.2% Transaction Value 05/20/14 Earnest, Inc. Atlas Venture / Maveron, LLC $15 05/05/14 Freedom Financial Network, LLC Aequitas Capital Management $110 04/16/14 LendingClub Corp. Wellington Management Co. $65 12/04/13 Regional Management Corp. Secondary $63 11/08/13 JGWPT Holdings, Inc. IPO $135 10/15/13 Springleaf Holdings, LLC IPO $358 09/19/13 Regional Management Corp. Secondary $96 Source: S&P Capital IQ 04/01/14 Social Finance, Inc. Discovery Capital Management $80 01/06/14 Remitly, Inc. Trilogy Equity Partners $6 12/12/13 Coinbase, Inc. Union Square Ventures $25 12/06/13 PayNearMe, Inc. August Capital / Maveron, LLC $20 09/04/13 CommonBond, Inc. Tribeca Venture Partners $100 08/09/13 Genesis Financial Solutions, Inc. NA $40 07/31/13 ZestFinance, Inc. Matrix Partners $20 06/25/13 peertransfer Education Corp. Maveron, LLC $6 2

3 Consumer Finance M&A Activity ($ in millions) Select M&A Transactions (LTM) Enterprise Enterprise Value / Equity Value / Closed Date Target Buyer / Investor Value Revenue EBITDA Net Income Book Value Pending DFC Global Corp. Lone Star Funds $1, x 5.9x NM 1.2x Pending Nicholas Financial, Inc. Prospect Capital Corp. $200.2* NA NA 10.1x 1.4x 04/17/14 Springstone Financial, LLC LendingClub Corp. $138.2 NA NA 10.8x 12.7x 12/13/13 PawnMart, Inc. Cash America International, Inc. $61.0 NA NA NA NA 11/12/13 LendingClub Corp. Coatue Management, LLC / DST Global $57.0* NA NA NA NA 10/11/13 Lendmark Financial Services, Inc. The Blackstone Group, LP $535.0 NA NA NA NA 09/06/13 Paramount Energy Solutions, LLC SolarCity Corp. $120.0 NA NA NA NA 08/14/13 TDP Superstores Corp. Cash America Pawn, LP $100.6 NA NA NA NA 06/25/13 19 Valu + Pawn Stores First Cash, Ltd. $70.2 NA NA NA NA 05/16/13 Mariner Finance, LLC Warburg Pincus, LLC $88.4 NA NA NA NA Source: S&P Capital IQ. *Denotes transaction value. 3

4 Consumer Finance Public Company Analysis ($ in millions, except per share data) Enterprise Value / Equity Value Closing Price % of 52 Equity Enterprise Gross Loans LTM 12/31/2013 LTM Margins Gross Loans LTM LTM 12/31/2013 Company Ticker 5/30/14 Week High Value Value Receivable Revenue EBT Net Income Book Value EBT Net Income Receivable Revenue EBT Net Income Book Value Consumer Finance Installment Lenders World Acceptance WRLD $ % $927 $1,413 $1,264 $618 $170 $107 $ % 17.3% 1.1x 2.3x 5.4x 8.7x 3.0x Regional Management Corp. RM $ % $186 $490 $602 $174 $46 $28 $ % 15.9% 0.8x 2.8x 4.0x 6.7x 1.1x Payday Lenders and Pawn Brokers Cash America CSH $ % $1,432 $1,986 $400 $1,822 $197 $144 $1, % 7.9% 5.0x 1.1x 7.3x 9.9x 1.3x First Cash Financial FCFS $ % $1,545 $1,650 $124 $671 $118 $86 $ % 12.9% NM 2.5x 13.1x 17.9x 3.5x DFC Global Corp. DLLR $ % $372 $1,192 $492 $1,041 $12 ($150) $ % (14.4%) 2.4x 1.1x 30.0x* NM 1.2x EZ Corp. EZPW $ % $663 $918 $337 $999 $90 ($0) $1, % (0.0%) 2.7x 0.9x 7.4x NM 0.7x Average 15.5% 6.6% 2.4x 1.8x 7.4x 10.8x 1.8x Median 14.2% 10.4% 2.4x 1.7x 7.3x 9.3x 1.2x Auto Finance Credit Acceptance Corp. CACC $ % $3,106 $4,659 $2,518 $609 $405 $242 $ % 39.8% 1.9x 7.7x 7.7x 12.8x 4.3x Carfinco Financial Group TSX:CFN $ % $218 $366 $225 $44 $26 $19 $ % 42.2% 1.6x 8.3x 8.5x 11.7x 3.4x Nicholas Financial, Inc. NICK $ % $180 $305 $411 $63 $29 $17 $ % 26.7% 0.7x 4.9x 6.3x 10.8x 1.3x Average 56.8% 36.2% 1.4x 6.9x 7.5x 11.8x 3.0x Median 58.2% 39.8% 1.6x 7.7x 7.7x 11.7x 3.4x Household Products Finance Rent A Center, Inc. RCII $ % $1,505 $2,299 NM $3,119 $186 $111 $1, % 3.6% NM 0.7x 8.1x 13.6x 1.1x Aaron's, Inc. AAN $ % $2,478 $2,262 NM $2,227 $169 $108 $1, % 4.8% NM 1.0x 14.6x 22.9x 2.1x Average 6.8% 4.2% NM 0.9x 11.4x 18.3x 1.6x Median 6.8% 4.2% NM 0.9x 11.4x 18.3x 1.6x Source: S&P Capital IQ. *Excluded from the mean and median calculations. 4

5 Featured Hyde Park Capital Transaction Bonds.com Group, Inc. has been acquired by MTS Markets International Inc. Overview of the Transaction On May 8, 2014 Bonds.com Group, Inc. (OTCPK:BDCG) was acquired by MTS Markets International, Inc., a part of the London Stock Exchange Group plc (LSE:LSE). has been acquired by MTS Markets International Inc. a part of Bonds.com, based in New York City, operates an electronic trading platform for odd lot fixed income securities. The Company s BondsPRO trading platform posts live, anonymous, and executable orders on thousands of bond offerings sourced directly from broker dealers and other end users. MTS Markets International operates as a security broker dealer for fixed income products. Hyde Park Capital s Role Hyde Park Capital was retained by Bonds.com s Board of Directors to explore strategic alternatives, including a potential sale of the Company. Hyde Park Capital acted as the exclusive financial advisor to Bonds.com and provided a fairness opinion for this transaction. 5

6 Integrity Expertise Results John Hill (813) Recent Transactions John McDonald (813) Keith Hodgdon Senior Vice President (813) Jami Gold Vice President (813) Michael Mariani Associate (813) Charlie Hendrick Senior Analyst (813) Hyde Park Capital Advisors, LLC 701 N. Franklin Street Tampa, FL Tel: Member FINRA/SIPC