Open Lending, which provides automated lending services to financial institutions, announced that it has entered an agreement to merge with Nebula Acquisition Corporation, a company formed by private equity firm True Wind Capital Partners.
The deal will be made through an acquisition and create a new Delaware holding company called Open Lending Corporation, with True Wind investors acquiring about 35 percent to 40 percent of the new company. Current owners will keep the majority stake.
Open Lending Corp. will be a publicly-listed entity with an implied estimated enterprise value of approximately $1.3 billion. The new company is expected to be funded by Nebula's cash in trust, up to $225 million of privately rated institutional debt financing, and a $200 million private placement raised at $10 per share.
Members of Open Lending’s executive team– John Flynn, cofounder, president, and CEO; and Ross Jessup, cofounder, CFO, and COO– will lead the new company.
"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,” said Flynn.
Founded in 2000, Open Lending’s platform utilizes proprietary data and advanced decisioning analytics to allow near-prime consumers to finance their vehicles at better rates than those provided by traditional lending alternatives. Yet the platform can still provide a similar risk profile to the lender as that of a prime borrower.
Last year, Open Lending facilitated more than $1.7 billion in automotive loans for more than 275 financial institutions. The company’s management expects EBITDA margins to exceed 50 percent and organic revenue growth to top 80 percent in 2020, representing over 140,000 loans facilitated.
San Francisco-based True Wind Capital focuses on investments in leading technology companies with a broad mandate including software, data analytics, tech-enabled services, internet, financial technology, and hardware. It formed Nebula to enter into mergers, capital stock exchanges, asset acquisitions, and the like with one or more businesses in the tech industry.