United Community Banks (United) and NLFC Holdings Corp. (NLFC) announced a definitive agreement for United to acquire NLFC, including its wholly-owned subsidiary, Navitas Credit Corp. (“Navitas”). Headquartered in Ponte Vedra, Florida, Navitas is a premier specialty lending company providing equipment finance credit services to small and medium-sized businesses nationwide.
As of September 30, 2017, Navitas reported outstanding loans and leases totaling approximately $350 million in the aggregate comprised of a diversified group of business borrowers operating in multiple industries and geographic markets. Navitas serviced over 17,000 finance contracts with a total original value of over $750 million for approximately 14,500 business customers.
Navitas was founded in 2008 and is led by industry veteran Gary Shivers, who spent 11 years as Co-Founder and President of Marlin Business Services prior to founding Navitas. Navitas’ senior management team averages over 25 years of financial services experience with various equipment finance companies. Navitas will operate as a separate subsidiary of United’s bank subsidiary, managed by the Navitas senior management team operating under the Navitas brand.
“This transaction is consistent with our commitment to grow our specialty and commercial lending business,” said Lynn Harton, President of United and Chief Executive Officer of United Community Bank. “Navitas will be a strong strategic addition to our existing platforms, providing attractive risk-adjusted returns and enabling us to further expand our client offerings. The transaction funding synergies are evident and Navitas brings significant profitability enhancement and growth potential. The business will continue to be run by Navitas’ talented management team, and our shared relationship-based approach makes this a great fit for our organization.”
Gary Shivers, President and Chief Executive Officer of Navitas, stated: “Navitas has enjoyed tremendous growth since its inception. We believe that to continue our strong growth, we needed to access more permanent capital and lower cost funding. Our partnership with the United team provides us with just that. Additionally, we are very excited about synergies that we believe exist between our commercial lending businesses, including a number of specialty industry verticals. This combination is clearly a win-win for both sides.”
The transaction value is estimated to total approximately $130 million, with 35% of the consideration to be paid in United common stock and 65% to be paid in cash. The acquisition is expected to be accretive to United’s earnings per share by approximately $0.20 in the first full year of operations and is consistent with United’s stated acquisition criteria pertaining to tangible book value and targeted internal rates of return. The transaction is expected to be completed during the first quarter of 2018.
“We have looked at a number of specialty lending opportunities in the past and did not find the right fit for our company,” stated Jimmy Tallent, Chairman and Chief Executive Officer of United. “We firmly believe that Navitas presents an exceptional opportunity for us and checks all of the boxes for what we are looking for in a specialty lending partner.”
Morgan Stanley & Co. LLC acted as financial advisor to United, and Troutman Sanders LLP served as its legal advisor. Keefe, Bruyette & Woods, Inc. served as Navitas’ financial advisor, and Greenberg Traurig LLP served as its legal advisor.