Subprime lender OneMain Financial will acquire auto financer Foursight Capital from Jefferies in an all-cash deal for $115 million, the companies announced Tuesday.
Upon close — expected in the first quarter of 2024 — OneMain will acquire Foursight’s $900 million loan portfolio, mostly composed of automobile retail installment contracts made to near-prime borrowers. Foursight operates in 38 states.
Foursight’s nearly 200 employees are expected to continue on at OneMain.
"Foursight is an attractive tuck-in acquisition giving us a seasoned team, scalable technology, tested credit models, a franchise dealer network and a high-quality loan portfolio to support our disciplined expansion into the auto lending business," OneMain CEO Doug Shulman said. "I look forward to welcoming [co-founder and CEO] Mark Miller and the Foursight team to OneMain and working together to continue to diversify and grow our suite of lending products for hardworking Americans."
Shulman told analysts on an October earnings call that OneMain planned to “continue to build our auto purchase lending program in a disciplined way.” Loan receivables within their auto lending vertical totaled more than $650 million that quarter.
With the Foursight acquisition, OneMain moves deeper into a business that several lenders have recently pulled out of: indirect auto lending, in which the lender’s relationship is directly with the dealership rather than the buyer.
Citizens Bank dropped its indirect auto loans business in July. Bank of Montreal did the same in September. Earlier that month, though, neobank Upgrade declared plans to venture into the sector, with CEO Renaud Laplanche noting that offering auto loans during a period of low affordability captures a lucrative business opportunity.