Just a few months since its launch in December 2019, Premium Finance Partners (PFP) has moved into acquisition finance – and made a big acquisition itself!
At the beginning of July 2020 the company acquired Insure Group Managers Finance (IGMF) and expanded its specialist finance offering to include financing to insurance brokers for the purpose of mergers and acquisitions.
PFP founder and CEO, Devan Kerr, says the move into broker finance complements the company’s premium finance offering and marks a natural progression in executing its long term strategy of becoming a diversified funder in niche business lines.
COVER’s Tony van Niekerk spoke to Devan about the expansion and the company’s plans around the IGMF acquisition.
TvN: How does the move into acquisition finance fit in with your service offering?
DK: The move into this market came as a very natural progression for our business, falling nicely into our expansion strategy.
When we started the business, we set out to provide loan funding into specialist areas that we felt were underserviced and could benefit from a refreshed approach. Core to our value proposition are two aspects most lenders don’t have: the size of our on-balance-sheet capital base, and our unique approach to lending and credit underwriting. As such, we look for markets that we feel can benefit from these aspects.
Initially we focused purely on the South African premium finance market and it is clear that our offering has been well received in this space. This strong market reception precipitated our expansion plans into the broker finance space, which we believe has been largely neglected over the past few years. We are excited to see how our offering can also provide value to this market.
TvN: How do the two products complement each other?
DK: Our success revolves around our ability to respond quickly to our clients’ needs, coupled with our unwavering commitment to adding value to their businesses. Whilst our aggressive rates offered on our premium finance product have offered lots of value to brokers’ clients, we felt that, in order to offer proper value to brokers, we wanted to do more than just fund their clients’ premiums. We want to become a key capital partner to their own businesses and assist them in executing on their acquisition strategies.
Although one of the key benefits of our broker finance product lies in its independence and lack of restrictive loan conditions, true to the basis of partnership our obvious priority in this space will be to roll out our offering to those brokers who already share a good strategic alignment with us.
The combination of the products also allows us to provide a holistic value offering to our brokers that none of our competitors do.
TvN: How are you going about executing this opportunity?
DK: In order to capitalise on any market opportunity in the lending space, capital availability is something that is paramount to success. We have spent a long time working with our principal funders to ensure they buy into our vision and commit the capital needed to take on this significant opportunity. Fortunately our performance to date and the extent of the market opportunity was something that our funders could align with. As such, our capital raise was again fully subscribed.
While I cannot detail the exact amount of the capital tranche, I am more than confident that we have the funding base to support brokers and deals of all sizes long into the foreseeable future.
Apart from our capital raising efforts, we have also spent a lot of time listening to the market and distilling what their needs are outside of PFP just being a pure debt funder. As a business, we are always looking at how we can do things differently and we are really excited about communicating our offering in more detail in due course.
TvN: Closing thoughts on your acquisition of IGMF and where to from here?
DK: IGMF was the lending arm of Insure Group Managers Limited and for over 20 years has provided two primary products to the local insurance market, namely premium finance and broker acquisition finance. As such, the acquisition and books acquired aligned very nicely with our current market offering and gave us a further foundation on which to scale. In addition, we identified a strong strategic alignment with the existing IGMF brokers, who have provided us with a great platform to go and explore future deals in the broker finance space.
We have purposefully designed our business, systems and capital base to allow for scalability, which makes the acquisition of IGMF a fairly straightforward transaction within our existing infrastructure.
Given our growth ambitions and capital support, we will continue to be on the lookout for more businesses in this space that complement our long term strategy.