Neo Financial has closed a deal to receive $185 million in a credit facility from ATB Financial and a handful of credit unions that it says will support the growth of Neo’s credit card program.
The news: Announced on Thursday, Neo said it had closed a syndicated “warehouse facility at $185 million.” In finance, a warehouse facility is an arrangement where companies can borrow against a pool of assets without giving up equity or taking out a traditional loan. Neo said the lending capital would be used to expand the funding capacity for the FinTech’s credit card receivables.
From the source: “Building a more competitive banking system in Canada is a team sport,” Neo co-founder and chief commercial officer Jeff Adamson wrote on social media. “This funding supports Neo’s credit card receivables as we grow. It also puts a bigger ambition into practice: building a platform where other financial institutions can participate in that growth.”
The context: Terms of the warehouse facility agreement were not explicitly outlined by Neo, but Adamson said under the terms of the arrangement there is room to increase the amount from $185 million up to $250 million. BetaKit reached out to Adamson to ask for details on the deal’s terms, but has not yet received a response.
ATB Financial, an Alberta Crown corporation, is leading the agreement, with additional participation from a handful of Canadian credit unions including Vancity, Beem Credit Union, Alterna Savings and Credit Union, and Innovation Federal Credit Union.
RELATED: Neo Financial lays off roughly 10 percent of its staff
Final thought: Thursday’s announcement comes after significant expansions for Neo’s credit card program in the last year. In June, the company launched four new credit cards, including partnerships with Mastercard and United Airlines. It remains among Canada’s fastest-growing FinTechs, according to The Globe and Mail and Deloitte. However, it has also faced some hurdles, losing two of its largest loyalty card partnerships, with both Tim Hortons and The Hudson’s Bay Company, this year. In September, Neo laid off roughly 10 percent of its staff, citing a desire to streamline operations.
BetaKit’s Prairies reporting is funded in part by YEGAF, a not-for-profit dedicated to amplifying business stories in Alberta.
Image courtesy Neo Financial.
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