Peoples Bank entered into a definitive agreement to acquire Vantage Financial, a provider of equipment financing headquartered in Excelsior, MN. Under the terms of the agreement, Peoples Bank will purchase 100% of the equity of Vantage Financial for total cash consideration of $54 million. Peoples Bank will also repay approximately $21 million in recourse debt on behalf of Vantage Financial.
Vantage Financial offers mid-ticket equipment leases primarily for information technology equipment and had lease assets of approximately $147 million as of Dec. 31, 2021. As a subsidiary, Vantage Financial will continue to operate under the Vantage Financial name. The closing of the transaction is subject to customary closing conditions and is expected to occur in March.
Upon completion of the transaction, Vantage Financial will become a subsidiary of Peoples Bank. The substantial majority of Vantage Financial’s current leadership and associates are expected to continue in their positions, led by William Foudray, co-founder and CEO of the company. However, Bob Murphy, co-founder and chairman of Vantage Financial, plans to retire in March and will not be remaining with the company.
As a result of funding synergies, the transaction is expected to be 3% accretive to Peoples Bank’s’ earnings per share in 2022 and more than 6% accretive to 2023 earnings per share. In addition, the transaction will result in approximately 8% tangible book value dilution with a projected earn-back of fewer than four years.
“We are excited to welcome Bill and his highly talented team to Peoples and look forward to Vantage continuing its impressive track record of originating high quality assets,” Chuck Sulerzyski, president and CEO of Peoples, said. “The addition of Vantage to the Peoples suite of product offerings will allow us to build upon our recent success with our North Star Leasing acquisition, while also becoming a top 100 U.S. leasing business based on combined assets.”
“My team and I are thrilled with the opportunity to partner with Chuck and the Peoples team. We believe that the combination of our intense focus on achieving above average risk-adjusted returns along with Peoples’ balance sheet will enable Vantage to accelerate on its track record of profitable growth,” Foudray said. “We look forward to closing the transaction and becoming part of the Peoples team. The increased capabilities and resources for Vantage will benefit our clients, business partners and employees. Last, we want to thank Bob Murphy for his leadership and many contributions over the years since the two of us founded Vantage in 2011. We wish him all the best in his retirement.”
Vantage Financial’s lease originations have grown by an average of 25% annually from 2016 to 2021. Vantage Financial’s portfolio generated an approximate yield of 6% in 2021, and the net investment of approximately $147 million at Dec. 31, 2021, was comprised of more than 1,000 leases with an average amount financed at origination of approximately $260,000.
Hovde Group and Squire Patton Boggs advised Peoples Bank on this transaction. Cherry Tree & Associates and Barack Ferrazzano Kirschbaum & Nagelberg advised Vantage Financial and its equity owners.