This was published 8 months ago
Plenti shares surge as fintech signs EV loan deal with NAB
By Millie Muroi
The National Australia Bank could buy up to 15 per cent of ASX-listed fintech lender Plenti, after joining forces with it to offer car, electric vehicle and household renewable energy loans.
On Tuesday, NAB announced it had entered a strategic partnership with Plenti to launch a co-branded automotive and electric vehicle loan. The bank will also develop a proposition to refer its customers to some of Plenti’s renewable energy finance offerings.
The news sent shares of the tech-focused lender Plenti soaring, up 66 per cent to 56 cents in afternoon trading.
Plenti chief executive Daniel Foggo said the partnership with NAB could be expanded.Credit: Janie Barrett and Louie Douvis
The “NAB powered by Plenti” car and electric vehicle loans will be launched between April and June next year, with the referrals to commence shortly after that. The deal comes as banks respond to increasing demand for green loans and government incentives for households to become more energy efficient.
NAB personal everyday banking executive Paul Riley said the use of electric vehicles and environmentally sustainable products in the household were becoming more common in Australian homes, and that the bank would look to build on its partnership with the fintech lender.
“We look forward to working with Plenti to explore ways to expand the strategic partnership further,” he said.
Digital lender Plenti was launched in 2014 with the view to disrupt the banking industry and take a smaller cut of loans through peer-to-peer lending – where investors lend their money to borrowers via an online platform, bypassing banks.
It has a loan portfolio of $2 billion, with loan originations for the recent half-year clocking in at $624 million.
NAB and Plenti have also entered into an equity investment agreement under which the big four bank could acquire up to 15 per cent of Plenti’s shares based on a number of milestones.
From Tuesday, and for the 18 months following the launch of NAB and Plenti’s co-branded car and electric vehicle loans, the bank may make a market purchase of up to 5 per cent of Plenti’s shares. NAB also has rights to acquire an additional 10 per cent of Plenti’s shares through two placements with floor prices of 90 cents a share and $1.20 a share.
Unified Capital Partners senior analyst James Bisinella said the strategic deal with NAB could lead to a $6 million to $10 million increase in Plenti’s net profit. “This agreement adds a material growth arm to Plenti, alongside the core group performing strongly,” he said.
Plenti chief executive Daniel Foggo said he hoped the partnership with NAB would help the company to continue to diversify its offerings.
“This is a very logical partnership that brings together a large player that’s got a lot of fantastic attributes including a large customer base and a very strong balance sheet with a business like ours which is able to move quickly,” he said.
“We’re excited about the potential for future expansion of the strategic partnership over time.”
However, Foggo said he had no intention of selling Plenti to NAB. “We expect this partnership to complement what we’re already doing.”
“We still maintain a retail investor marketplace from the heritage of when we started the business as a peer-to-peer lender, and we would expect that this partnership will help us build scale in the areas that we’re already active. You’ll see that this partnership has been designed specifically so that Plenti continues to carry on under its current governance and board.”
Under the arrangement, loans would be funded by NAB and held on their balance sheet, with the credit risk to be borne by the bank.
NAB will be responsible for marketing and promoting the loan products to customers in its personal banking customer base and Plenti will be responsible for processing loan applications, conducting credit assessments, settling loans and providing ongoing loan and customer management.
Foggo added Plenti would receive an upfront payment of a couple of million dollars to establish the technology, infrastructure and operational set up for delivering the loans. The company will also receive upfront fees for car and electric vehicle loans which will step down once the loan book reaches $1 billion as well as a monthly servicer fee which will scale down until the loan book reaches $3 billion.
The fintech lender said annual revenue from the deal would be roughly $20 million assuming an average loan book of $1 billion and originations of $500 million.
NAB and Plenti will also develop a referral program whereby NAB will advertise some of Plenti’s renewable energy finance products to its customer base, for which the bank will receive referral fees.
Both deals have an initial term of five years with a possible extension of five years subject to the agreement of both NAB and Plenti.
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