DFC GlobalCorp. (DLLR) closed the acquisition of Super Efectivo, a pawn loan provider in Spain. The acquisition will help the company to strengthen its position as a secured pawn lender in Europe.
DFC Global acquired Super Efectivo for a consideration of $5.1 million. Founded in 2006, Super Efectivo manages eight stores in Madrid, offering pawn loans on gold jewelry and gold buying services.
Pawn loans are given in exchange of customers’ personal property. These are generally short term in nature. Demand for pawn loans is thus impervious to the broader currents of the economy and likewise shields the lender from economic fluctuations.
DFC Global had earlier acquired Sweden-based Sefina Finance AB, which is a leading Scandinavian pawn lending business, for a consideration of $90.6 million.
DFC Global strives to be one of the leading providers of financial services to the under-banked and unbanked consumer (the ALICE demographic or asset limited, income constrained, employed). The present acquisition will help DFC Global to penetrate the Spanish market, where a greater part of the 47 million population fall under ALICE and ARTI (asset rich, temporarily illiquid) demographics.
DFC Global’s top line in the fiscal second quarter surged 44% on the back of higher consumer lending revenue (up 61% year over year) and pawn service fees with sales increasing nearly three-fold. The Super Efectivo acquisition would further synergize the top line.
The company also enjoys a solid liquidity position. Going ahead, we expect the company to grab opportunities through acquisitions and deploy available funds in a manner that will further enhance future earnings.
We retain our Neutral recommendation on DFC Global. The quantitative Zacks #3 Rank (short-term Hold rating) for the company indicates no clear directional pressure on the stock over the near term.
Headquartered in Berwyn, Pennsylvania, DFC Global provides a range of consumer financial products and services to under-banked consumers. The company competes with Moneygram International Inc. (MGI).
DFC GLOBAL CORP (DLLR): Free Stock Analysis Report
MONEYGRAM INTL (MGI): Free Stock Analysis Report
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