Duo Bank of Canada has reached a definitive agreement to purchase all outstanding shares of Fairstone Financial Holdings Inc., which includes all operating subsidiaries, from an investor group led by J.C. Flowers & Co. LLC and Värde Partners, Inc. The transaction is expected to close in the second quarter of 2020. Financial terms were not disclosed.
The transaction is supported by Stephen Smith, Centerbridge Partners, and Ontario Teachers’ Pension Plan.
J.C. Flowers and Värde Partners, acting as equal partners, acquired CitiFinancial Canada from Citi in 2017 and rebranded the company as Fairstone. Today, Fairstone has over C$3 billion in assets on a consolidated basis and a network of 239 branches with approximately 1,400 employees nationwide.
In April 2019, a partnership of Stephen Smith and affiliates of Centerbridge Partners, L.P. acquired Walmart Canada Bank and renamed as Duo Bank of Canada.
The Duo Bank and Fairstone combination will create a market-leading financial services company with over $4 billion in receivables.
photo credit: Fairstone Financial Holdings
Fairstone Financial Holdings Inc. to be Acquired by Duo Bank of Canada
Combination will create market-leading financial services company with over $4 billion in receivables
TORONTO and MONTREAL, Feb. 19, 2020 /CNW Telbec/ – Duo Bank of Canada (“Duo Bank”), a Toronto-based financial services provider supported by Stephen Smith, Centerbridge Partners L.P. and Ontario Teachers’ Pension Plan (“Ontario Teachers'”), has reached a definitive agreement to purchase all outstanding shares of Fairstone Financial Holdings Inc. (“Fairstone” or “the Company”), which includes all operating subsidiaries, from an investor group led by J.C. Flowers & Co. LLC and Värde Partners, Inc. Headquartered in Montreal, Fairstone is Canada’s leading non-bank provider of responsible credit solutions for near-prime borrowers with over $3 billion in assets on a consolidated basis.
“Duo Bank’s mission is to provide value-driven financial products that are clear and simple, enabling Canadians to focus on what matters to them. Fairstone’s close to 100-year history of providing near-prime borrowers with access to responsible credit is perfectly aligned with this mission,” said Stephen Smith, Chairman of Duo Bank.
“We’re very pleased to be joining forces with a Canadian financial services institution that shares our customer-focused commitment and community-driven approach to helping everyday Canadians access financial solutions that fit their needs,” said Scott Wood, President and Chief Executive Officer of Fairstone. “We look forward to enhancing the complementary growth potential of both businesses.”
“Duo Bank specializes in turnkey and customizable financial services solutions designed to deepen customer loyalty and grow sales,” said Trudy Fahie, Chief Executive Officer of Duo Bank. The bank’s growing complement of products and services includes credit cards, rewards programs, retail sales financing, deposits and related protection services.
Fairstone has two key business lines: lending directly to consumers through its branch network and online platform, and financing consumer retail and vehicle purchases through retailers and automobile dealerships. J.C. Flowers and Värde Partners acquired CitiFinancial Canada from Citi in 2017 and rebranded the company as Fairstone.
“Throughout Fairstone’s growth and expansion, it has maintained a laser focus on the customer experience as well as a strong compliance and controls environment from its former legacy under bank ownership. We are excited to partner with the Fairstone team through Duo Bank to support their combined next phase of growth,” said Miriam Tawil, Managing Director at Centerbridge.
“This transaction creates a strong and diversified Canada-based financial services entity that has robust finances, operational excellence and a history of delivering topline and earnings growth. We look forward to working with our partners, Stephen Smith and Centerbridge, to support the combined company’s future success,” said Jane Rowe, Executive Managing Director, Equities at Ontario Teachers’.
The agreement includes all of Fairstone’s operations as well as all the Company’s 1,400+ employees. The transaction is expected to close in the second quarter of 2020 and is subject to regulatory approvals and other customary closing conditions. Terms of the transaction are not disclosed.
RBC Capital Markets and CIBC Capital Markets acted as financial advisors and Torys LLP and Freshfields Bruckhaus Deringer US LLP were legal counsel to Duo Bank of Canada in connection with the transaction. Willkie Farr & Gallagher LLP acted as legal counsel to Centerbridge Partners L.P. Osler, Hoskin & Harcourt LLP acted as legal counsel to Ontario Teachers’ Pension Plan.
About Fairstone Financial Holdings Inc.
Fairstone is Canada’s leading non-bank 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 privately held by an investor group led by funds managed by affiliates of J.C. Flowers & Co. LLC and Värde Partners. More at Fairstone.ca.
About Duo Bank of Canada
Duo Bank is a Schedule I Canadian Bank founded on a mission to provide value-driven financial products that are clear and simple, to help Canadians focus on what matters to them. Duo Bank specializes in turnkey and customizable financial services solutions designed to deepen customer loyalty and grow sales. The growing complement of products and services includes credit cards, rewards programs and related protection services and deposits. With a value-driven approach to financial services, robust sales channels and innovative and efficient operational solutions, Duo Bank partners with industry leading service providers to deliver financial solutions for its customers. Headquartered in Toronto, Duo Bank is privately held by an investor group led by funds managed by affiliates of Stephen Smith and Centerbridge Partners, L.P. More at www.duobank.com.
About Stephen Smith
Stephen Smith, one of Canada’s leading financial services entrepreneurs, is the Chairman, CEO and Co-founder of First National Financial Corporation, Canada’s largest non-bank mortgage lender with $110 billion of mortgages under administration. He is the Chairman of Canada Guaranty Mortgage Insurance Company, which he owns in partnership with Ontario Teachers’ Pension Plan and is the largest shareholder in Equitable Bank, Canada’s leading alternative lender and the country’s ninth largest bank. In 2015, Queen’s University announced the naming of the Stephen J.R. Smith School of Business at Queen’s University in honour of Mr. Smith and his historic $50 million donation to the school.
About Centerbridge Partners, L.P.
Centerbridge Partners, L.P. is a private investment management firm employing a flexible approach across investment disciplines – from private equity to credit and related strategies, and real estate – in an effort to find the most attractive opportunities for our investors and business partners. The firm was founded in 2005 and as of December 2019 has approximately $27 billion in capital under management with offices in New York and London. Centerbridge is dedicated to partnering with world-class management teams across targeted industry sectors and geographies to help companies achieve their operating and financial objectives. For more information, please visit www.centerbridge.com.
About Ontario Teachers’
The Ontario Teachers’ Pension Plan (Ontario Teachers’) is Canada’s largest single-profession pension plan, with $201.4 billion in net assets at June 30, 2019. It holds a diverse global portfolio of assets, approximately 80% of which is managed in-house, and has earned an annual total-fund net return of 9.7% since the plan’s founding in 1990 (all figures as at Dec. 31, 2018 unless noted). Ontario Teachers’ is an independent organization headquartered in Toronto. Its Asia-Pacific region office is located in Hong Kong and its Europe, Middle East & Africa region office is in London. The defined-benefit plan, which was fully funded as at December 31, 2018, invests and administers the pensions of the province of Ontario’s 327,000 active and retired teachers. For more information, visit www.otpp.com and follow us on Twitter @OtppInfo.
SOURCE Fairstone Financial Holdings Inc.
For further information:
Duo Bank of Canada: Trudy Fahie, CEO, email@example.com; Fairstone Financial Holdings Inc.: Fiona Story, Vice President, Corporate Communications, firstname.lastname@example.org, +1 438 843-5442