Sale of Stratton Finance

Canterbury Partners is pleased to have advised the Shareholders of Stratton Finance (‘Stratton’) on their divestment of a 65% interest to Pepper Money Limited (ASX:PPM) (‘Pepper Money’).

The transaction values Stratton at $120.0 million, with the 65% interest acquired by Pepper Money for $78.0 million in cash. The parties have also entered into a Put and Call Option in relation to the remaining 35% stake in Stratton, exercisable from Q1 CY2024.

Stratton Finance is one of Australia’s leading online direct-to-consumer asset finance broking platforms, with more than 23 years of operating experience, plus strong brand recognition built on trust and transparency. It is supported by a national network of offices (with its head office in Melbourne) and franchises, with a total headcount of circa 160 employees.

Pepper Money is one of Australia and New Zealand’s leading non-bank lenders. It was established in 2000 as a specialist residential home loan lender in Australia with a focus on providing innovative home loan solutions to customers that were being underserved by traditional lenders. Pepper Money today has a broad product offering of residential home loans, asset finance commercial real estate and novated leases in Australia and residential home loans in New Zealand.

The partnership will provide a range of strategic benefits to both businesses, including:
• Delivering a new and immediate avenue for sustained incremental origination volume for Pepper Money’s Asset Finance business;
• Broadening Pepper Money’s distribution footprint by leveraging Pepper Money’s established infrastructure and shared service operations;
• Continuing to deepen Pepper Money’s distribution base through Stratton’s well established broker base and franchise network;
• Growth opportunities by providing the Stratton network access to all Pepper Money’s products across mortgages, personal loans and commercial real estate loans;
• Access to Stratton’s customer data and insights that will further enhance Pepper Money’s product development pipeline; and
• Supporting efficiencies and cost synergies through vendor and other optimisation.

Stratton Founder and Chair, Rob Chaloner said, “Our relationship with Pepper Money has grown considerably over recent years with Pepper Money today being our largest funder of auto and leisure assets”.

“Our businesses share a similar culture with a strong focus on customer satisfaction. The acquisition provides us with closer alignment with Pepper Money and its strong track record of product innovation which we will be able to integrate into our lending and technology capabilities to provide seamless customer experiences with enhanced choice and value”.

“We are excited about the vertical integration and growth opportunities that this partnership will bring.”