The arrangement almost exactly mirrors that done recently by Angle Finance which has taken over the dealer finance business from Westpac’s St George car loans operations.
Under the arrangement, Allied Credit has purchased the floorplan finance operations of Macquarie as well as the backend IT systems that manage the lending for dealer stock.
Under the deal, and just like the hybrid St George deal with Angle Finance, Macquarie will continue to operate all existing car loans until they are paid out. They are not part of the deal and when the final loan is closed out Macquarie will exit the car dealer finance business.
Again, as a mirror of the Angle Fiance deal with St George, Allied Credit has secured the rights to gain access to Macquarie’s dealers so that any fresh loans written after the changeover date will join the Allied Credit loan book.
The changeover is expected to be completed by the end of this year.
Allied Credit’s task will be to bring all the existing dealers affiliated with Macquarie across to the Allied camp.
Finance industry observers say the acquisition marks “the end of an era” in that it is the first time in 60 years that a major bank is not providing floor plan funding for dealers.
In addition, with both the Allied Credit and Angle Finance deals, something like 40 per cent of the car loan business is changing hands.
Meanwhile, no purchase price for the Macquarie-Allied Credit deal has been disclosed.
Macquarie purchased the total retail and wholesale auto loans business operated under the ESANDA brand from the ANZ Bank in 2015 for more than $8 billion. The purchase was made up of $6 billion for the retail loans book and $2 billion for the wholesale floor plan business funding dealer stock.
GoAutoNews Premium has been told that the price paid by Allied for the floor plan business would have been “more modest” given that Macquarie was looking at a way to exit auto financing for some time.
However it is estimated that Angle Finance, which is part of Cerberus Capital Management, paid $200 million in goodwill to take over St George’s $1 billion auto finance floor plan funding business.
Commenting on the deal, Allied Credit’s CEO, Jon Moodie, said: “We are excited by this acquisition for several reasons. Not only does it provide immediate growth and an uplift in new business originations, but also our capacity and capability will be enhanced by the expertise of Macquarie dealer finance staff, the majority of whom will be offered roles within Allied Credit to help us take advantage of our new market position.”
“This acquisition supports Allied Credit’s expansion strategy and continues the company’s ten year growth trajectory which has been underpinned by long-term partnerships with leading manufacturers, distributors, and key dealer groups,” Mr Moodie said.
Mr Moodie, a member of the team that led Macquarie Leasing’s growth in vehicle finance and the transition to meet the challenges flowing from the changes made by ASIC to flex commissions in 2018 has moved across to Allied Credit in November 2019.
Allied Credit, which was then a business funding many of Australia’s biggest names in the retailing of motorcycle, marine and powersports has since then broadened its finance business offer to dealers in the wider auto finance market.
Mr Moodie was joined by Russell Bryant who was a division director – national manager, strategy and transformation – at Macquarie Leasing. Mr Bryant was appointed COO at Allied.
Both Mr Moodie and Mr Bryant are widely known in the broad car retailing business which became a new focus for Allied Credit.
Mr Moodie was with Macquarie Leasing, Australia’s largest independent vehicle leasing business, for 13 years, including five years as managing director.
During that time he helped drive the growth of the business to reach in excess of $15 billion in assets.
In the year leading up to the transition to the new auto finance rules by ASIC in November 2018, Mr Bryant was on the front line with dealers, preparing them for the changes they faced in the crucial area of the management of finance sales.
By John Mellor