PAG terminates Home Credit investment

The private equity firm’s RMB2.31 billion ($338 million) investment in Home Credit, made in the form of an interest-bearing long-term loan, was returned last month. Home Credit disclosed the termination of the partnership in its half-yearly report, offering no reason for the move.

The PAG investment went into a Hong Kong unit of the Czech company. Its plan was to help Home Credit forge alliances with strategic partners in China with the ultimate objective of building scale towards an IPO of the local entity within five years.

Home Credit, founded in 1997, provides consumer loans to retail customers with little or no credit history. It has a presence in 11 countries across Central and Eastern Europe, Asia and the US, serving 29 million active clients through nearly 430,000 distribution points. It issued EUR20.7 billion ($24 billion) in loans in 2017, generating net interest income of EUR2.4 billion and net profit of EUR244 million.

Home Credit is already well established in China, having been one of the first four consumer finance companies to receive a nationwide license in the country. As of year-end 2017, it had 237,500 points of sale, 16.3 million active clients, and a loan book of EUR9.7 billion in China. Net interest income and net profit from the local business came to EUR1.45 billion and EUR123 million, respectively.

PAG is currently raising its third pan-Asian fund, which has a target of $4.5 billion. It completed a first and final close on Fund II in late 2015 with commitments of $3.66 billion, having initially sought $3 billion.

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• Topics
• Greater China
• Expansion
• Financials
• China
• PAG
• Growth capital