DFC Global Buys Super Efectivo - Analyst Blog
March 20 2012 - 7:45AM
Zacks
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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