Acquisitive credit provider acquires lender in £10.8m deal

West Yorkshire credit provider Morses Club has acquired a Sheffield-based digital current account provider for £10.8m. 

Batley-headquartered Morses Club has acquired U Holdings, trading as U Account, through its fully owned subsidiary Shelby Finance.  The acquisition comprises of an initial cash consideration of £5.8m, financed from existing Morses Club cash and debt facilities, and deferred consideration of up to £5m, payable over the next four years to February 2023 – conditional upon certain net profit criteria having been met.

Based at the Electric Works in Sheffield, U Account has historically been loss-making. In the year ended 28 February 2019, U Account generated revenues of £1.7m and operating losses of £4m. Morses Club added that it was expected that post integration and restructuring, the losses incurred in the remainder of FY20 would be in the range of £1.4m to £1.7m.

“Management are confident that the Acquisition will be earnings accretive thereafter,” added Morses Club.  

The deal will see Morses Club acquire U Account’s technology and e-money banking platform, as well as 20,000 current active customers.

It is the fourth acquisition for Morses Club since January. The listed firm first bought home collected credit lender Eccles Savings and Loans and soon after announced the acquisition of Hays Credit LLP. The firm then bought CURO Transatlantic, trading as WageDayAdvance, out of administration in a £8.5m deal.

Morses Club said the acquisition of was an important step in the company’s strategy of building a digital offering. The AIM-listed firm added: “Furthermore the Acquisition follows the recently announced addition of certain assets of CURO Transatlantic to the Company’s product offering with the enhanced breadth of capability highly beneficial to the Company’s credit strategy.”    

U Account is a  digital current account provider offering an alternative to traditional banking by providing a fully functional agency banking service. As well as providing card services with its current accounts through contactless Mastercard debit cards, U Account also offers in-app features and functionality to help customers manage their finances more effectively.

U Account focuses on customers who are underserved by traditional banks, offering a current account banking service that enables customers to receive wages or benefits directly, manage their outgoings, and avoid unnecessary bank charges. U Account customers can also deposit cash at PayPoint’s terminals across the UK and earn rewards from recognised retailers.

Morses Club said many of its existing 235,000 customers had expressed interest in opening an online current account, making U Account’s digital platform particularly complementary to Morses Club’s existing offering. Morses Club plans to leverage its proven expertise in lending to the non-standard credit market to offer U Account customers new lending products and services to meet their financial needs.

Paul Smith, Chief Executive Officer of Morses Club, said: “This acquisition represents a fantastic opportunity to enter the rapidly growing online banking market. U Account features the full suite of digital banking services and has grown its customer base to c.20,000 active customers. U Account’s offering is highly complementary to that of Morses Club, and through this acquisition we expect to deliver significant synergies and cross selling opportunities.

“This is another exciting step for Morses Club as, consistent with our stated strategy, we continue to diversify our product offering to serve a broader range of customers across the non-standard credit space. Our differentiated use of technology and innovation enables Morses Club’s customers to access a broader range of more flexible and suitable credit.”

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