NEW YORK – An investor group led by J.C. Flowers & Co. LLC, a leading private investment firm specializing in the financial services industry, and Värde Partners, Inc., a leading global alternative investment firm, today announced the completion of its previously announced sale of Fairstone Financial Holdings Inc. (“Fairstone” or “the Company”) to Duo Bank of Canada, a Toronto-based financial services provider supported by Stephen Smith, Centerbridge Partners L.P. and Ontario Teachers’ Pension Plan.
Värde Partners and J.C. Flowers acted as equal partners in the transaction, which began in 2017 when the investor group acquired CitiFinancial Canada from Citi and rebranded the Company as Fairstone. Under the ownership of J.C. Flowers and Värde, Fairstone has grown into Canada’s leading non-bank provider of responsible credit solutions for near-prime borrowers. The group announced its initial agreement in February 2020.
During J.C. Flowers’ and Värde’s ownership, Fairstone more than doubled its operating net income through the course of operational and financing improvements. Fairstone diversified its capital structure and reduced its funding costs as a standalone entity, including issuing the first consumer loan ABS transaction in the Canadian market, followed by a second ABS transaction at better terms, obtaining a credit rating and issuing a high yield bond.
Fairstone made significant investments to establish a best-in-class enterprise technology system, enhanced its data-driven custom credit scoring models, developed a customer-centric approach to client service, and diversified and enhanced its products to reach a broader customer base, including through its new e-commerce finance offering.
Citi and National Bank Financial Inc. acted as lead financial advisors to J.C. Flowers and Värde, and Barclays also served as a financial advisor. Stikeman Elliott was legal counsel to J.C. Flowers and Värde.
Terms of the transaction were not disclosed.
About Fairstone Financial Holdings Inc.
Fairstone, through its operating subsidiary, Fairstone Financial Inc., is Canada’s leading provider of responsible lending solutions for near-prime borrowers with over $3 billion in assets on a consolidated basis. Fairstone, including through its predecessors, has close to a 100-year history of providing Canadians with access to responsible credit.
The Company has two key business lines: lending directly to consumers through its branch network and online; and financing consumer retail and car purchases through retailers and dealerships. Headquartered in Montreal, Fairstone is an operating subsidiary of Duo Bank of Canada. More at www.fairstone.ca.
About J.C. Flowers & Co.
J.C. Flowers is a leading private investment firm dedicated to investing globally in the financial services industry. Founded in 1998, the firm has invested more than $16 billion of capital, including co-investment, in 58 portfolio companies in 18 countries across a range of industry subsectors including banking, insurance and reinsurance, securities firms, specialty finance, and services and asset management. With approximately $6 billion of assets under management, J.C. Flowers has offices in New York and London. For more information, please visit www.jcfco.com.
About Värde Partners
Värde Partners is a leading global alternative investment firm with roots in credit and distressed. Founded in 1993, the firm has invested $80 billion since inception and manages $15 billion on behalf of a global investor base. The firm’s investments span corporate and traded credit, real estate and mortgages, private equity and direct lending. Värde employs more than 300 professionals worldwide with offices in Minneapolis, New York, London, Singapore and other cities in Asia and Europe. For more information, please visit www.varde.com.
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