Pepper Money boss Mario Rehayem sees a growing opportunity to fund clients who fail to meet stricter lending standards imposed by big banks as the non-bank lender prepares to go public.
The company, currently controlled by private equity giant KKR, is issuing the shares at an offer price of $ 2.89 and will have a market capitalization of nearly $ 1.3 billion.
Pepper, which lends for assets such as homes, commercial properties and cars, targets customers who do not meet credit criteria set by major banks.
Mr Rehayem said the growing growth of the odd-job and self-employed economy provided Pepper with a substantial market to tap into, as the big banks further automated their underwriting processes and focused on “customers”. first order ”to consolidate their margins.
“We’re very lucky because we have an appetite for a larger segment of borrowers, as opposed to banks, where they have a monoline offer of a risk appetite for this client, and that is that primary client.” , he said on Monday.
“What the banks are doing is they are tightening their appetite for credit risk, which reflects falling prices. By tightening their margins, they tighten their risk profile. “
Pepper charges its customers a higher interest rate to cover the additional risk it takes by lending to people who in many cases would have difficulty obtaining credit from major banks. Mr Rehayem also predicted growth in his target markets as banks took a more cautious approach to clients who received emergency financial support from the government during COVID-19.
Like banks, Pepper enjoys strong new credit growth due to the strength of the real estate market, and is also exposed to commercial real estate markets and the loan of equipment such as utilities and vans, which benefited from tax breaks.