TORONTO (Reuters) - Business has doubled for Canadian financial technology firm Financeit since it purchased the home improvement financing assets of Toronto Dominion Bank and the company is seeking more acquisitions, its founder said.
TD sold its indirect home improvement financing assets, which had a book value of C$339 million ($258 million), in September, to Financeit and Concentra, a provider of services to credit unions, in a deal that added more than 800 merchant dealers to Financeit’s portfolio.
Chief Executive Officer Michael Garrity, Financeit’s founder, said in an interview the deal had transformed his business, doubling its loan value and revenue, and Financeit would now consider more acquisitions.
“Part of our growth plan is to consolidate the industry,” he said. “We’re aiming to build a multi-billion dollar company, focused on something the banks aren’t very good at. Where banks are playing in that space today, we are active buyers in those divisions.”
An initial public offering is also “absolutely” in Financeit’s future, but it is not something the company is thinking about on a day-to-day basis, Garrity said.
Founded in 2011, Toronto-based Financeit seeks to enable businesses such as home improvement companies to offer hassle-free payment plans to their customers, with instant credit checks and competitive interest rates and without reams of paperwork and long wait times for checks and approval decisions. Merchants do not pay fees to use the platform.
“That whole transaction happens in under five minutes in a driveway on a mobile device,” said Garrity of Financeit’s cloud-based platform.
The company, which has processed over $1.5 billion in loans, has quarterly regulatory compliance checks and a fraud prevention process to ensure transactions are valid.
Financial technology startups, or fintechs, have attracted increasing attention from banks and are viewed as potential disruptors to the industry because of the way they are changing how consumers handle and interface with banking, lending, payments, and insurance.
This has prompted banks to invest in, partner with, or acquire fintech startups. The TD deal, which took about a year to negotiate, is an atypical arrangement.
The company, which only operates in Canada, currently has about 4,500 active merchants using its platform. Garrity said it is aiming to enter the U.S. market late next year.
Financeit, which has raised money through a variety of investors including FIS Global and Goldman Sachs, is on track to be profitable on an accounting basis in the next six months, said Garrity.
($1 = 1.3128 Canadian dollars)
Reporting by Solarina Ho; Editing by David Gregorio