BY Richard Summerfield
Truist Financial Corp has agreed to acquire the Service Finance business of ECN Capital Corp in a deal worth $2bn.
Following the closing of the transaction, which is expected in the fourth quarter of 2021, subject to standard licensing and regulatory approvals, as well as compliance with customary closing conditions, ECN Capital intends to pay a special dividend of C$7.50 per common share or approximately US$1.5bn from the net proceeds to its common shareholders.
Service Finance, which provides home improvement loans, operates solely in the US and has underwritten more than US$7bn in loans since it was founded in 2004. ECN acquired the company in 2017 for US$304m.
“The acquisition of Service Finance expands the scale and capabilities of our wholesale payments businesses, enabling Truist to deliver innovative financing solutions to Service Finance’s nationwide network of dealers and serve homeowners across the country,” said Mike Maguire, head of national consumer finance and payments at Truist. “This acquisition significantly strengthens Truist’s leadership position in the rapidly growing POS industry, and we’re excited to partner with Mark Berch and the entire Service Finance team.”
“Service Finance’s client-centric model, coupled with Truist’s financial strength and commitment to POS lending, perfectly position us to continue to provide distinctive, secure and successful client experiences,” said Jeff McKay, head of Truist’s POS lending unit. “Just like Sheffield, Service Finance partners with leading brand names in their industry and has earned a reputation for unparalleled client service and delivering innovative solutions.”
“As a former home improvement contractor, I know how important it is to help contractors and their customers get access to convenient and attractive financing so our end-customers can spend more time enjoying the moments that matter, in the place that matters the most – their homes,” said Mark Berch, president and founder of Service Finance. “This is a dynamic market with tremendous potential, and joining Truist only improves our outlook for growth.”
As a result of the deal that was entered into with Truist, ECN received fully subscribed agreements from its senior lenders for the modification of its existing senior credit facility following the closing of the transaction. ECN Capital’s existing senior credit facility will be modified and restated to provide a total of US$700m in revolving financing for a period of four years from the closing date of the transaction. The Canadian Imperial Bank of Commerce will act as the managing agent and syndication agent, and the Bank of Montreal will act as the collateral agent.
Truist, the eighth-largest bank in the US, was formed in 2019 from the merger of BB&T and SunTrust.
News: TCF buys ECN Capital's service finance business for $2 billion