Online used car exchanging platform Vroom has unveiled the pricing of its first car loan securitization offering of $296 million, the organization said in a news release Thursday (Feb. 10).
Vroom said the securitization is a private offering, that will see its recent purchase of the vehicle loan provider United Auto Credit Corporation (UACC) selling approximately $281.35 million of its rated notes.
\”This transaction is an exciting initial step in integrating UACC's strong reputation and AAA ratings into Vroom's long-term strategic goals,\” Paul Hennessy, CEO at Vroom, said in news reports release.
Eventually, Hennessy said, UACC's in-house financing capabilities will let Vroom provide \”a superior digital car buying and lending buyer experience, offer new methods for existing partners and new investors to gain access to Vroom's loan portfolio and permit us to fully take part in loan economics, transitioning Vroom from a 100% indirect model to a fully captive model that has the possibility to accelerate our sales velocity and generate a significant gross profit improvement for the shareholders.\”
Vroom said the transaction is UACC's 13th securitization and its first since Vroom closed its purchase of the financing firm Feb. 1.
Hennessy said a week ago the acquisition was essential to helping Vroom produce a \”captive finance business that allows us to service customers across the credit spectrum\” and help it access additional commerce solutions.
\”By integrating a car lender like UACC, with rich expertise in the non-prime space, Vroom will be able to serve a broader portion of the subscriber base,\” Hennessy said. \”We believe this can mean greater efficiency on our marketing efforts and permit us to scale the company faster.\”
The deal saw more than 500 UACC employees join Vroom, including UACC CEO Jim Vagim and chief financial officer Ravi Gandhi. Vroom said Vagim continues operating UACC's third-party finance business, while Gandhi will play a vital role in Vroom's captive finance arm.
