Arsenal Capital Partners has completed its first financial services deal with a $30 million (€21 million) investment in FirstAgain, a San Diego-based consumer lending company.
Though the stake size was not disclosed, the deal makes Arsenal the company’s largest investor, according to Carty Chock, an Arsenal principal who co-heads the firm’s financial services investments. A former CCMP Capital Advisors principal and 16-year JPMorgan veteran, Chock joined Arsenal in September 2007.
Chock has known the FirstAgain management team for more than a decade: While at JPMorgan, he invested in a prior venture of FirstAgain’s founders, Gary Miller and Dave Zeller. The two had previously founded PeopleFirst, which became the largest online auto lender in the US prior to its $170 million sale to Capital One in October 2001.
Zeller’s and Miller’s FirstAgain targets consumers with high credit scores, “a terrific demographic to go after”, Chock said. “We’re talking about people who have excellent credit.”
Chock said the company occupies an interesting niche, particularly given its completely paperless loan system, the first of its kind in the US, and its speed in disbursing funds.
“You can apply for the loan in the morning and receive funds by the afternoon,” Chock noted.
Current market conditions also make this “an interesting time” to invest in such a specialty finance niche, Chock said.
“Credit markets are extremely tight, even for people who have good credit,” he said.
In addition to the company’s management and Arsenal, Merrill Lynch has also previously provided working capital and warehouse lending facilities to FirstAgain.
New York-based Arsenal has a strong financial services pipeline that Chock said the firm will likely yield further deals in coming months.
In terms of growth equity, he said, many companies are “very hungry for capital right now”. Arsenal will seek out financial services companies with an “appropriate management team and niche strategy that would survive in this current economic climate”, Chock added.
Arsenal manages roughly $800 million in capital and also targets the healthcare and specialty industrial sectors.