Financeit acquires rival loan business Simply Group Financial

Financeit, which offers point-of-sale financing for home improvement, recreational vehicle and retail industries, announced on June 26 that it closed a deal to buy Simply Group’s over $1.5-billion assets, SNAP Home Finance and certain assets of EcoHome Financial.

“We’re thrilled to announce another milestone in our growth journey as we focus on expanding our market footprint and our enduring commitment to the Canadian point-of-sale financing market,” Michael Garrity, Financeit chief executive said in a press release.

The terms of the transaction were not disclosed.

In an interview, Garrity said the merger brings the combined origination of about $1.5 billion annual loan volume, including Financeit’s $1 billion in loans booked last year and Simply Group’s $400 million loans booked. But he said the company’s goal is to do about $2 billion or more next year on a combined basis.

He said they consider the size of their market to include all large ticket home improvement sales that done in Canada, which makes the market $70 billion in size.

“Market size against everyone who does what we what we do today in the market, we’re the largest by a lot. But against the size of the market we’re actually going after, we’ve got a lot of work to do,” he added.

Financeit’s biggest competition comes from home equity lines of credit or HELOCs, which Garrity said have been shrinking in capacity as the value of homes decrease.

The takeover follows Financeit’s acquisition by InterVest Capital Partners in 2022.

Toronto-based Financeit provides payment plans to enterprise businesses, big-box retailers, OEMs and dealer networks for their projects and purchases. It operates as a subsidiary of CommunityLend Holdings Inc.

The company said Simply Group Financial, SNAP and EcoHome have facilitated over $3 billion in home improvement loans for more than 500,000 Canadians. The merger would add Simply Group’s 180 employees to Financeit.

Simply Group acquired all three businesses in 2020, including a $71-million deal for the point-of-sale component of Home Capital’s retail lending portfolio in September and acquiring SNAP Financial Group Inc. in a deal valued at $511 million in October of that year.

Now with FinanceIt, the combined companies are able to take those products and put them on a “superior” technology platform, Lawrence Krimker, chief executive of Simply Group Financial, SNAP Home Finance and EcoHome, said in an interview. Krimker, who founded Simply as Simply Green Home Services in Toronto in 2013, will serve as a board member of the newly combined business.

“My role is really to ensure that we continue to stay true to the value propositions that we’ve created for our users and for our dealers, and to ensure that the transition of … our collective loan businesses are done successfully,” Krimker said.

“I’m excited about what FinanceIt has in front of them because they have outstanding technology and you couple that with our business, which had best-in-class dealer experience. So you put both of those together, I think it creates a very successful company.”

Krimker said the industry had seen a massive spike in business during the COVID-19 pandemic, as people spent a lot more time at home and saw opportunities to renovate their houses.

As restrictions lifted, he said his company had “another pretty tremendous kind of tailwind” to support the industry in the form of higher interest rate costs. Those higher interest rate costs, he said, have pushed people to invest in real assets such as their homes by doing upgrades that improved overall value, and that they looked for alternative methods for financing those projects.

Rising costs have been a “real trend” over the last few years in home improvement, with costs from labour to the cost of supplies all going up, said Garrity.

“The job that you’re trying to get done is getting more expensive and you combine (that) with less available credit options, you’ve got a tsunami of what’s going to slow down the home improvement industry,” he said.

Garrity said being able to people on a monthly payment plan and give them a marketing offer, like don’t pay for a certain period of time or a reduced rate, amid rising costs is what he thinks is the right direction to go to keep sales active in the industry over time.

“And that’s why we built this tool and we’re acquiring companies that help us to grow size and scale,” he said.