Propel Holdings (PRL) M&A Announcement summary

Deal rationale and strategic fit

• Acquisition of QuidMarket provides a strong entry into the UK fintech lending market, targeting over 20 million underserved UK consumers and aligning with global expansion and diversification goals.

• QuidMarket was selected after evaluating over 30 global targets, with a focus on cultural fit, profitability, and growth potential.

• The UK market offers a favorable regulatory environment, high fintech adoption, and significant unmet demand for regulated credit solutions.

• Both companies share a culture of frugality, profitable growth, and strong management continuity, with QuidMarket's management remaining in place post-acquisition.

• The acquisition supports expansion of product and geographic offerings, following recent launches in Canada and the US.

Financial terms and conditions

• The acquisition price is US$71 million, all-cash, for 100% of QuidMarket, representing a 7.4x LTM multiple as of June 30, 2024.

• Funded through a C$100 million bought deal equity offering (up to C$115 million with over-allotment), co-led by Scotiabank and Canaccord.

• If the acquisition is not completed by March 26, 2025, offering proceeds will be returned to investors.

• Upon closing, each subscription receipt converts to one common share, and holders receive equivalent dividends.

• The transaction is expected to be immediately accretive and will reduce the acquirer's debt-to-equity ratio from 2.0x to 1.3x.

Synergies and expected cost savings

• Integration of AI-powered underwriting, automation, and risk-based pricing is expected to drive operating leverage, efficiency, and growth.

• Product diversification and marketing partnerships will be introduced to accelerate growth.

• Propel expects the acquisition to be immediately accretive to adjusted EPS in 2024 and 2025, prior to potential synergies.

• Additional capital will enable QuidMarket to scale faster without increasing credit risk.