Deep into the pandemic where debt levels are at all time highs, personal lender MoneyMe (ASX: MME) is set to join forces with rival Society One which will elevate the two lenders in a hugely competitive sector that will increase revenue opportunities while also saving more than $17m per annum in shared expenses.
The acquisition will shift SocietyOne’s $392 million loan book to MoneyMe, giving the combined entity a pro-forma loan book of $934m (30 November 2021), a 72% increase on MoneyMe’s current book.
On top of that, both lenders will benefit substantially on their bottom lines with $17m in pre-tax cost synergies by combining departments that will assist in driving a material uplift in cash profitability.
“The SocietyOne acquisition combines two of the most widely recognised consumer credit disruptors to deliver immediate scale advantages and incremental revenue opportunities,” said MoneyMe Managing Director, Clayton Howes.
“The strategic value is immense for both businesses, and we are incredibly excited. The opportunity to accelerate growth and cost efficiencies are quickly realised by combining the strengths of both brands and migrating SocietyOne operations onto MoneyMe’s high-tech Horizon Technology Platform.
“There are many new innovations we will expand on, including the SocietyOne credit score product which will be brought to the MoneyMe customer base and the Banking-as-a-Service partnership with Westpac that we will continue to explore.”
Through a combination of MME shares and cash, the implied acquisition cost will be $132m based on MoneyMe’s share price of $1.76 at market close on 16 December 2021, where shareholders of privately-held SocietyOne can elect to take up to 7.5% of payment in cash.
In FY21, SocietyOne generated $50m in revenue (unaudited) from its 25,000 active loan customers and 147,000 customers engaged in SocietyOne’s credit score wellness product.
By gaining access to those customers, especially the wellness score product which is free to use, MoneyMe will be able to position its lending product directly in front of them, even targeting certain customers based on their known debt and repayment histories.
MoneyMe expects the acquisition to be revenue per share accretive from FY23 onwards.
Alfred Chan is a Business Reporter at The Sentiment specialising in ASX-listed small cap companies, a bloodstock enthusiast and former equities analyst.
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