U.K. issuer NewDay to acquire installment lending platform Deko

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U.K. credit card lender NewDay, which issues co-branded cards for Amazon, Laura Ashley and Topshop, is expanding its technology offerings by acquiring installment lending platform Deko.

Deko is being acquired to diversify NewDay's strategy from being solely a credit card provider to becoming a one of the U.K.’s leading digitally enabled consumer finance providers. This marks the first acquisition under NewDay's new CEO, John Hourican, who joined NewDay last March after CEO stints at Bank of Cypress and RBS’ investment bank unit.

NewDay is expected to continue to run Deko as a standalone unit with existing management. According to a report from Sky News, the deal is expected to be valued at £40 million (about $52 million) based upon Deko’s financial performance. The deal is expected to close after standard regulatory approval.

Deko does not directly lend to consumers, rather it provides a platform through which it offers installment credit and consumer loans through a panel of lenders. Deko reported that over a 10-year period it has processed more than £2 billion (about $2.6 billion) in loan volume.

NewDay was founded in 2000 as SAV Credit and was renamed NewDay in 2014 following the acquisition of Santander UK plc’s retail store card portfolio the preceding year. The Santander UK plc portfolio itself had been acquired from GE Money in 2008 and included major retailers such as Debenhams, Topshop, House of Fraser and Laura Ashley. The Santander portfolio had 7 million customers at the time of acquisition.

NewDay launched a new Amazon co-brand card in 2017 to replace the co-brand card that had been launched with MBNA (a unit of Bank of America) in 2014. In 2007 NewDay acquired HSBC’s Marbles card brand and in 2010 acquired Citi’s U.K. card customer portfolio, which it rebranded as Opus.

According to NewDay’s last annual report in 2018, it had over £2.6 billion (about $3.4 billion) in outstanding receivables, of which 38% were co-branded credit cards, with the balance being held on its own branded cards. NewDay claims to be a specialist in serving the “Near-Prime” segment, which should help it leverage Deko’s platform of installment loans, which tend to target younger consumers who can oftentimes lack significant credit histories that would qualify them for mainstream credit cards.

NewDay was acquired in 2017 by private equity firms Cinven and CVC Capital, which bought NewDay from, Värde Partners, which owned the firm since 2011.

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