Enova, best known for short term consumer loans, is acquiring OnDeck, one the leading online small business lenders, in a $90 million cash and stock deal
In a deal that will rock the fintech space Enova announced this afternoon that they are acquiring OnDeck for $90 million. OnDeck has been struggling since the onset of the pandemic, to say the least, as small businesses across the country face unprecedented stress.
OnDeck reported in their Q1 earnings call in April that 45% of their loan book was in some stage of delinquency as they reported a $59 million net loss. They reported Q2 earnings earlier this afternoon and they somehow managed to eke out a $2.2 million profit on originations that were down 89% from the prior quarter, as they suspended new lending.
OnDeck CEO Noah Breslow was on the Enova earnings call this afternoon and he made the comment that the nadir for their loan book was in April and things have improved considerably since then as they economy has opened up. They have reduced their provision for credit losses as the future started to look better.
Anyway, back to Enova. They are a publicly traded company, primarily focused on consumer loans, that was spun out from Cash America in 2014. Incidentally, one of their brands, short term lender CashNetUSA, was actually started by Al Goldstein (co-founder of Avant) back in 2004, he sold to Cash America two years later. Another brand is NetCredit which is more of a near prime consumer lender (I interviewed the head of NetCredit on the podcast back in 2018).
While Enova has been focused on consumer lending with a range of products they have started making inroads in small business lending. They have two small business brands: Headway Capital and The Business Backer. While they started Headway Capital in-house Enova actually acquired Business Backer in 2015 so they have some history with acquisitions. Combined, the small business lending operations at Enova make up just 15% of their loan book. After the acquisition of OnDeck that number will rise to 60%. That gives you some idea of how big a deal this is for Enova.
While Enova has scaled back lending considerably since the start of pandemic they are in a strong position financially. In their Q2 financials released this afternoon they show a net profit of $48 million for Q2 on revenue of $259 million despite the slowdown and they have $321 million of cash on hand.
According to the press release announcing the acquisition the $90 million transaction values OnDeck at $1.38 per share which is a 90% premium on the closing price of $0.73 from July 27. The deal includes $8 million in cash and each share of OnDeck will be worth 0.092 shares of Enova. The transaction has been unanimously approved by both boards and is expected to close later this year.
I have to admit I didn’t have Enova on my OnDeck potential acquirer bingo card. While Enova is a strong company they are best known for their short term consumer loans and so I didn’t really think they were a fit. I expected the acquirer would be another small business lender, a regional bank, a large community bank, or possibly even a top 10 bank like PNC (who is an OnDeck/ODX client).
I listened to the entire Enova earnings call this afternoon and it is clear they are in a strong financial position right now with a lot of cash on hand. I would call this an opportunistic deal which transforms Enova from a tiny player to a major force in small business lending.
In my opinion, Noah and the board did the right thing and found a home for OnDeck, their employees and their shareholders. While this is likely not what anyone envisioned in their wildest dreams at the start of the year it was important that the OnDeck business survive and be in a position to thrive again. This deal provides that possibility.
The fintech landscape is changing before our eyes as I imagine this will not be the last pandemic-induced acquisition we see this year.
IPO Alert: 100,000% Gains!?
Ever had a 10-bagger before?
In other words, a single investment that returned 10x your money?
How about a 1,000-bagger? That’s enough to turn a tiny investment of $500 into half-a-million dollars.
Or what about a 100,000-bagger? That would turn $500 into $50 million.
Gains like these might seem insane. Impossible.
And while it’s true they don’t happen often, they’re happening right now.
And I’m about to tell you where to find them.
Something in the Air
To set the stage here, let’s rewind the clock to yesterday morning…
That’s when tech startup Airbnb filed paperwork to go public.
As you might know, Airbnb is an online marketplace. It helps ordinary people like us make extra income by renting out our properties or spare rooms to guests.
Initially, it seemed like an odd idea. But today, it features over 7 million listings around the world. It’s even thrived amidst the coronavirus, as more people book quick escapes close to home.
Airbnb expects to go public later this month at a valuation of about $35 billion. At that level, it would be more valuable than global hotel chains like Hilton.
And for the startup investors who got in years ago, back when Airbnb was just an “odd” little company at the ground floor, this IPO will create a windfall of profits:
And yes — even estimated returns of 100,000x.
Here’s How to Snag a 100,000-Bagger
One of Airbnb’s earliest investors is named Paul Graham — but at first blush, he was not impressed with the startup’s business prospects.
In fact, according to Wired Magazine, when Airbnb’s founders pitched him their idea, Graham’s first question was, “People are actually doing this? Why? What’s wrong with them?”
But when he learned about the founders’ determination to succeed, he started changing his mind. “Wow,” he said. “You guys are like cockroaches. You just won’t die.”
And that’s why, in 2009, he plunked down $20,000 in exchange for 6% of the company.
At Airbnb’s expected IPO valuation of $35 billion, a 6% stake would be worth about $2.1 billion.
That’s like turning $20,000 into $2.1 billion…
This Is Your Shot
So if the stock market’s average annual returns of about 6% aren’t getting you where you need to go…
And if you’re fed up with the pathetic 0% interest rates you can earn with savings accounts or bonds…
Consider an alternative:
Sure, some of them might seem “odd” when you first learn about them…
And sure, some of them won’t work out — so you need to invest in many of them over time so you can minimize your risk and give yourself a shot at snagging a big winner…
But if you’re looking to turn a tiny starting stake into something that could actually be life-changing, this is your shot.
Payment Service Provider PingPong Payments Secures E-Money License in Luxembourg
PingPong Payments, a payment service provider for e-commerce sellers, announced on Wednesday it has received its authorization as an Electronic Money Institution (EMI) by the Commission de Surveillance du Secteur Financier (CSSF) in Luxembourg. Founded in 2015, PingPong stated that its mission of helping global e-commerce sellers keep more profits, by beating the rates traditional banks offer.
“Today, the company serves more than 600,000 online sellers worldwide, has processed more than $10 billion in cross-border payments for e-commerce merchants to-date, and transfers more than $100 million per day for international e-commerce sellers. Global merchants around the world trust PingPong Payments to help them save on cross-border payments, VAT & supplier payments, and more.”
PingPong reported that the license enables it to offer a more flexible array of services and increase the scope of customers in the future. Speaking about the license, Ning Wang, Co-Founder and Chief Business Officer at PingPong, stated:
“We are extremely proud to announce obtaining an EMI license in Luxembourg, a world-renowned fintech hub and pioneer within the EU market. This will strengthen our existing services which can support customers on different market places such as Amazon, eBay and Walmart and grant us the flexibility to broaden our business model to beyond e-commerce platforms.”
Pierre Gramegna, Minister of Finance, Luxembourg added:
“Today, Luxembourg is one of the leading payment and e-money hubs in the EU and I’m happy to see that it continues to grow. In this sense, I welcome that PingPong has just upgraded its Luxembourg presence with a new e-money license that will help it better serve its European customers.”
Ziglu Claims Title as Largest Equity Crowdfunding Round of 2020 on Seedrs
Money app Ziglu says that its equity crowdfunding round is the largest offering on Seedrs for all of 2020. The securities offering closed on Seedrs this past fall.
The Fintech raised over £6 million backed by about 1250 investors. Ziglu set a low-end hurdle of £1 million and topped this target in just three hours. Ziglu raised 500% over their stated goal and now has raised £11 million in total during the year including the initial seed funding round.
Ziglu’s Chief Growth Officer, Yang Li, issued a statement in a release:
“We wanted to give our customers the opportunity to be a true part of Ziglu through ownership. We have been overwhelmed by support for the crowdfunding round, resulting in Ziglu becoming the largest equity campaign on Seedrs this year. Our vision for financial inclusion and community support translates through all our initiatives whether it’s crowdfunding, charitable giving or personal finance – providing fair and equal access to everyone – the same approach we take to crypto.”
The Fintech sector has emerged as a hot crowdfunding market in the UK largely due to the robust startup sector as well as the ongoing digital transformation in financial services. Ziglu states that it has been classified as a “Knowledge Intensive Company” (KIC) by HMRC, enabling KIC investors to claim tax relief on investments up to the value of £2 million.
John Lake, Chief Commercial Officer at Seedrs, said that Ziglu is an exciting Fintech platform that is changing the way we handle digital and traditional currency:
“We are thrilled to see how engaged Seedrs investors have been with Ziglu’s campaign.”
Ziglu offers both traditional & digital currencies managed in a single app. The platform provides access to digital currencies including Bitcoin, Bitcoin Cash, Ether, Litecoin, and XRP. Ziglu says it has built a bank-grade platform in the cloud from scratch that provides currency transfers and payments at competitive rates. Ziglu is authorized by the FCA as an Electronic Money Institution (EMI) and is one of the first digital currency companies to be registered under the UK’s Money Laundering Regulations.
Ziglue was co-founded by Mark Hipperson the former CTO and co-founder of Starling Bank – a leading challenger bank.
While COVID initially hit the pause button on most sectors of industry, online capital formation, and Fintech in general, have experienced a pretty strong year.
Have a crowdfunding offering you’d like to share? Submit an offering for consideration using our Submit a Tip form and we may share it on our site!
OurCrowd Partners with Portuguese VC Firm UnderRock Investments
This most recent partnership is part of a growing number of global alliances established by OurCrowd including: Stifel brokerage and investment banking firm, United Overseas Bank Limited (UOB) in Singapore, The National Australia Bank (NAB) in Australia, Reliance Private Client in India and Innogy SE in Germany.
OurCrowd will expand its footprint in the Iberian region with that arrangement with the VC. UnderRock Managing Partner Miguel Horta e Costa will direct the initiative.
“Lisbon is one of the fastest-growing tech hubs in Europe, with innovative startups in fintech, production planning, and artificial intelligence. The arrival of OurCrowd is a unique opportunity for value creation in the Portuguese market as a whole, whilst building ties between Israeli and Portuguese technologies,” said Horta e Costa.
OurCrowd will offer curated deals to Portuguese investors while simultaneously showcasing Portuguese startups on OurCrowd’s platform, providing startups in the region exposure to accredited investors worldwide.
OurCrowd CEO Jon Medved commented on the partnership:
“Lisbon is ranked as one of Europe’s innovation hotspots and startup hubs to watch. The city has a booming innovation scene and we look forward to investing in the latest technologies the ecosystem has to offer.”
OurCrowd adds that David Hatchwell, Chairman of EXCEM, a Madrid-based Family Group, and a leader of the Jewish community in Spain, will continue to lead OurCrowd’s Iberian operations. Hatchwell said they look forward to building upon their Spanish operations that has grown rapidly since 2017.
“The tech ecosystem in Spain and Portugal is home to a fast-growing crop of startups that are of great potential interest to OurCrowd’s 58,000 investors around the world. At the same time, we will connect local entrepreneurs and traditional industries eager to embrace new technology with strategic and research partners in Israel’s world-leading startup community. We believe everyone will enjoy the fruits of this new Mediterranean partnership,” said Hatchwell.
OurCrowd reports over $1.5 billion of committed funding, and investments in more than 220 portfolio companies and 23 venture funds. Currently, the investment platform claims approximately 60,000 accredited and institutional investors, family offices, and VC partners from over 183 countries.
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