J.C. Flowers and Värde-backed Fairstone closes $322 mln ABS deal

Canadian non-bank lender Fairstone Financial Inc has closed an inaugural asset-backed security (ABS) transaction totalling $322.4 million.

Fairstone said the deals marks the first personal loan ABS transaction in Canada and “signals the creation of a new asset class” in the market.

Based in Montréal, Fairstone provides lending solutions to near-prime and non-prime borrowers.

Formerly CitiFinancial Canada, the company was acquired in 2016 from Citigroup Inc by a consortium led by U.S. private equity firms J.C. Flowers and Värde Partners.


Fairstone Financial Inc. Closes Inaugural $322.44 Million ABS Transaction

Oversubscribed offering also marks first personal loan ABS transaction in the Canadian market

MONTREAL, March 22, 2019 /PRNewswire/ – Fairstone Financial Inc. (“Fairstone”), Canada’s largest non-bank provider of responsible lending solutions for near-prime and non-prime borrowers, announced today the completion of its inaugural ABS transaction totalling $322.44 million. The deal marks the first-ever personal loan ABS transaction in Canada and signals the creation of a new asset class in this market.

The transaction included:

$225,000,000 Class A Notes rated AAA(sf) by DBRS and Aa2(sf) by Moody’s
$40,750,000 Class B Notes rated AA(sf) by DBRS and A3(sf) by Moody’s
$35,430,000 Class C Notes rated A(sf) by DBRS and Ba1(sf) by Moody’s
$21,260,000 Class D Notes rated BBB(high)(sf) by DBRS and Ba3(sf) by Moody’s

“Our first ABS transaction is a reflection of the work we do each day to provide Canadians with responsible lending solutions as well as our considerable experience in originating, underwriting and servicing personal loans,” said Scott Wood, Chief Executive Officer of Fairstone. “This will enable future growth and assist more Canadians in accessing responsible credit in the near-prime space.”

“We’re pleased to see very strong investor interest and support for this asset class, which resulted in a significantly oversubscribed transaction through all tranches,” said Oona Robinson, Chief Financial Officer of Fairstone. “We look forward to continued growth in 2019.”

RBC Capital Markets acted as the Structuring Lead and joint bookrunner, alongside National Bank of Canada Financial Markets, with Citigroup and Credit Suisse Securities (USA) LLC supporting as co-managers.

About Fairstone
Fairstone is Canada’s largest non-bank provider of responsible lending solutions for near-prime and non-prime borrowers with, as at December 31, 2018, over $2.9 B in assets on a consolidated basis. Fairstone, including through its predecessors, has over 95 years of history in providing Canadians with access to responsible credit. The Company currently serves over 300,000 customers with 235 branch locations in communities across 10 provinces and 2 territories in Canada. Fairstone has two key business lines: direct consumer lending (personal loans and mortgages) and indirect consumer lending (retail and automotive financing via partner networks). Headquartered in Montreal, Fairstone is privately-held by an investor group led by funds managed by affiliates of J.C. Flowers & Co. LLC and Värde Partners. More at Fairstone.ca.