With financial hardships brought upon as a result of COVID-19, debt management company Credit Intelligence (ASX: CI1) is set to expand their exposure to Australia’s high levels of personal debt via the 60% acquisition of debt negotiation business Chapter Two Holdings (CTH).
Listing on the ASX in 2018 but primarily operating in Hong Kong’s credit funding sector, the Chapter Two acquisition is Credit Intelligence’s first in Australia. The move, however, is far from foreign territory for Credit Intelligence which has operated here since 2018 via a strategic alliance with insolvency advisory firm Cor Cordis.
“This transaction marks Credit Intelligence’s first step in building a comprehensive debt management business in Australia,” said Credit Intelligence Chairman, Jimmie Wong.
“Having reviewed a number of potential Australian acquisitions over the last two years, we are excited to be partnering with and investing in CTH to unlock its significant growth potential, and continuing our Asia-Pacific expansion strategy”.
As consideration for the 60% stake in Chapter Two, Credit Intelligence will pay $400,000 in cash and issue $320,000 in CI1 shares.
The acquisition continues Credit Intelligence’s growth strategy in the Asia Pacific region where the Company last year acquired 60% of Singapore finance companies Hup Hoe Credit and ICS Funding, and is continuing to seek acquisition opportunities across Asia and Australia.
For the half year ending 31 December 2019, Credit Intelligence reported $1.2m profit after tax, a 355% increase on their corresponding 2018 period.
Their stake in Chapter Two will be funded by existing cash reserves which remain healthy following the securing of a $5m funding facility from LS Whitehall Group, a U.S-based investment group with a strategic focus on the fintech sector and disruptive technologies.
As COVID-19 lifts Australia’s unemployment rate, Credit Intelligence will use the acquisition to accelerate growth in Australia, leveraging experience in Hong Kong where they have more than 13,000 bankruptcy cases under personal insolvency management.
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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