Flexigroup (ASX: FXL)

We are revisiting FXL due to the recent acquisition of Fisher and Paykel Finance (F & P) and the appointment of new CEO Symon Brewis-Watson. F&P is a non-bank provider of credit cards and retail point of sale finance in New Zealand. F&P was acquired for $A234m upfront cash payment and deferred consideration of $A61m. The upfront cash component was funded by a $150mn entitlement offer at $2.20 with the remaining A$84mn in debt. The 8.8x (post synergies) P/E paid is in our view an attractive price given the growth opportunities available. F&P appears to be a natural fit for Flexigroup, with many retail partners being shared between the two businesses (eg: JB Hi-Fi). Following the acquisition, FXL’s receivables book is approximately $2bn. New CEO: Flexigroup Chairman, Andrew Abercrombie, said “Symon’s significant international financial services experience and deep understanding of consumer and business markets in Australia and New Zealand will be of great benefit as FlexiGroup executes its strategy to be the leading non-bank trans-Tasman provider of diversified financial services.” Subscribe to our newsletter here: (VIEW LINK)