Upon closing of the deal, Open Lending will become a publicly listed company with an estimated enterprise value of about $1.3bn
Open Lending, a US-based automated lending services provider to financial institutions, has signed a business combination agreement with Nebula Acquisition.
As per the terms of the deal, Nebula Acquisition will buy the lending services provider through a new Delaware-based holding company, which will become a publicly-listed entity with an estimated enterprise value of about $1.3bn at the time of closing.
The new company will change its name to Open Lending and is expected to be listed on The Nasdaq Stock Market.
Nebula Acquisition is a special purpose acquisition company sponsored by True Wind Capital, a California-based private equity firm.
Open Lending serves the automotive finance market in the US
Based in Texas, Open Lending caters to the automotive finance market through its lending enablement platform. The company provides loan analytics, automated decision technology, risk-based pricing, and risk modelling to automotive lenders across the US.
Compared to traditional lending alternatives, Open Lending’s platform is said to allow near-prime consumers to finance their vehicles at more attractive rates. The platform is also claimed to offer a similar risk profile to the automotive lender as that of a prime borrower.
Open Lending’s lending enablement platform is said to have facilitated automotive loans worth more than $1.7bn in 2019 for more than 275 financial institutions.
Open Lending co-founder, president, and CEO John Flynn said: “We are immensely proud of Open Lending’s accomplishments since our founding over 15 years ago, and we are excited to lead the next stage of development alongside the True Wind team.
“We believe there is significant runway for new growth opportunities within our existing base of credit unions and banks as well as through untapped opportunities such as OEM captive partnerships.”
Under the transaction terms, Open Lending’s stockholders will receive a combination of cash and shares in the new publicly-listed entity.
The cash part of the consideration is expected to be funded by Nebula Acquisition’s cash in trust, up to $225m of privately rated institutional debt financing along with a $200m private placement raised at $10.00 per share.
Bregal Sagemount, which is an existing minority investor in Open Lending, will continue as a public stockholder in the new entity.
Nebula Acquisition co-CEO and True Wind Capital founding partner Adam Clammer said: “Open Lending’s ability to demonstrate consistent organic growth and high levels of profitability represents an exciting investment opportunity within the risk-based analytics ecosystem.
“John and his team have developed a highly-scalable technology platform that helps hard working consumers get into a new or used car at the best rate possible.”
The closing of the deal is expected to take place in the second quarter of this year. It will be subject to approval by shareholders of both Nebula Acquisition and Open Lending apart from meeting of certain other closing conditions.