Pepper has announced it has purchased a stake in two Chinese lenders as the firm aims to grow its understanding of what foreign borrowers want.
The specialist lender has bought a 12 per cent share in PrimeCredit Limited and in Shenzhen PrimeCredit Limited – two consumer finance lenders in the Hong Kong and southern China markets.
Pepper is part of an international consortium led by China Travel Financial Holdings (CTS) as majority investor and York Capital Management Global Advisors which completed the acquisition of the Hong Kong and Shenzhen businesses of Standard Chartered.
The acquisition broadens Pepper’s footprint in Asia and includes a team of 541 people in Hong Kong and 118 in Shenzhen, focusing on origination of personal loans and credit cards, with assets under management of US$1.15 ($1.44) billion.
Pepper also owns a mutual savings bank in South Korea which originates residential mortgages and personal loans through a small retail branch network and a team of direct sales representatives.
PrimeCredit will extend its Hong Kong market presence into the fast-growing Chinese consumer finance market by leveraging the existing network and local resources of China Travel Financial and Pepper’s consumer credit expertise.
It will also grow Shenzhen as a hub from which to build into other regions in China.
According to Pepper, PrimeCredit has a total customer base of more than 132,000, with strong brand recognition and a commitment to customer service and relationship management similar to that of the specialist lender.
“This is an exciting next step in the development of our Asian network,” Pepper’s co-group CEO, Patrick Tuttle, said.
“Pepper’s team will work closely with our local strategic partner CTS to provide strategic and operational advice to PrimeCredit management to further expand its microfinance business across the Chinese market."
Co-group CEO Mike Culhane added that the specialist lender was attracted to the Asian businesses because of their strong customer relationships, market-leading positions, and tremendous growth prospects in mainland China.
“We see great potential to grow them and to add to the products they currently offer,” he said. “Our 12 per cent stake in both businesses and management role will give us a great insight into what Chinese customers want in terms of products and services.”
Pepper's director of sales and distribution, Mario Rehayem, revealed in September that Pepper was on the verge of acquiring a lender.
“It’s offshore and it’s a lender. It’s similar to our Spanish business, which is personal loans. It also does mortgages. It’s definitely a very, very large acquisition,” he said then.
Mr Rehayem added that Pepper’s growth, from 80 staff in January 2011 to 1,000 staff in September 2014 had partly been driven by acquiring businesses in that period in the UK, Ireland, Spain and South Korea.