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FSC reinvests in Spanish consumer finance specialist Ufasa

by Staff GBAF Publications Ltd
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– European financial services specialist signs capital increase to drive further growth

– FSC Partner Martin Rauchenwald appointed to Board of Directors

– Ufasa has recorded 46% CAGR in originations since FSC’s investment in 2020

LONDON – 16 DECEMBER 2022 – Financial Services Capital (“FSC”), the private equity investor dedicated to the transformation of the European financial services sector, has completed a capital increase for its portfolio company, Spanish consumer finance specialist Unión Financiera Asturiana (“Ufasa”). At the same time, FSC Partner Martin Rauchenwald has joined the Board of Directors of Ufasa, following approval from the Bank of Spain for his appointment.

Ufasa is an independent consumer finance specialist, founded in 1984 and headquartered in Oviedo, Asturias. The company was formed as a regional champion for financial inclusion, providing financing to consumers who are often excluded or ignored by mainstream banks, and has grown to become a leader in specialist distribution, credit scoring and underwriting. FSC first invested in the business in March 2020.

The €10 million capital increase will enable Ufasa to accelerate the growth of its loan book, as well as underpin the modernisation of its business model and digitalisation, with the aim of becoming a leader in point-of-sale financing. Ufasa primarily provides point of sale credit for high value consumer goods sold by partner distributors, with a differentiated value proposition based on service to the trade, as well as simplicity and transparency.

Martin Rauchenwald, Co-Founder and Managing Partner at FSC, commented:
“Since FSC invested in Ufasa, growth has been supercharged and unit economics have been improved in line with FSC’s original investment thesis. Management have proven their ability to execute, and the business will double down on its existing track record of execution and continue its growth plan, demonstrated by its track record since change in control. We have a unique business plan that is resilient to market forces, meaning we can profitability grow into even a shrinking market.”

Since its investment, FSC has executed a transformation plan, leading a step-change in Ufasa’s technology and infrastructure. During this period, the bank has achieved 46% CAGR in its origination, at the same time as diversifying its funding structure and cutting cost of funds. Ufasa’s strong underwriting has enabled it to achieve the lowest non-performing loan rate in its history, despite the Covid pandemic, and the cost of risk continues to drop. Combined with high and steady lending margins, Ufasa’s interest income is also at an all-time high, significantly beating FSC’s forecasts.

Rauchenwald joined FSC in 2020 with a 20-year career in the financial services industry behind him. He has held senior management roles, including a number of executive board positions, at UniCredit Group, where he worked across offices in Munich, London, Vienna and Moscow with a focus on growing and restructuring businesses. Martin also co-founded Ithuba Capital AG, a financial markets advisory and technology-enabled portfolio wind-down specialist. After a successful exit, he joined Oliver Wyman as a Partner for financial services to drive the transformation of financial services companies. Martin graduated from the University of Santander, Spain, and has an MBA specialising in banking and insurance from the Karl Franzens University in Austria.

Pedro Escudero, Chief Executive Officer at Ufasa, added:  
“It is very exciting to work with FSC in the transformation of Ufasa, which has set us on course to achieve our goal of becoming a leading technology-enabled consumer finance business. During this time we have upgraded and migrated our core systems to a modern technology platform, pursued workflow automation and API integrations, and built a machine learning-driven underwriting model with real-time decision-making. There is significant growth and transformation to come, following our recent history of success, with the opportunity to further diversify product lines and distribution.”