Elevate Credit, a consumer lending company that went public in 2017 but has recently seen its stock price sag, is now going private.
The Fort Worth, Texas, lender is being sold to an affiliate of Park Cities Asset Management, an alternative asset manager. The all-cash transaction carries an implied value of $67 million, the two companies said in a press release Wednesday.
Under the terms of the deal, Park Cities agreed to pay $1.87 per share. After the agreement was announced, Elevate's stock price climbed by 76 cents to $1.81.
In a letter to Elevate employees, CEO Jason Harvison indicated that
"As we have discussed, the current market conditions present a challenging backdrop for our organization and so many others in the consumer finance industry," Harvison wrote. "As credit and demand remain uncertain, the opportunity to partner with Park Cities allows us to protect our legacy and the value that we bring to customers."
Harvison also told Elevate's employees: "I understand that this announcement also begs many questions about what this new trajectory means for us personally. I do not have all the answers yet, but I will keep you updated as the process unfolds."
Elevate has long said that it wants to become the preferred credit provider to 100 million Americans who lack access to traditional credit products. The company and banks that license its technology have originated more than $10 billion in credit to nearly 3 million consumers, according to Elevate.
But since Elevate went public in April 2017, its stock performance has fallen short of expectations.
Earlier this year,
Shares in Elevate, which were priced at $6.50 at its IPO, have been trading below $2 since August, and they briefly fell below $1 earlier this month.
Elevate and Park Cities have a preexisting relationship. The asset manager provides corporate debt to Elevate, as well as financing for an Elevate credit card.
The deal announced Wednesday is expected to close in the first quarter, according to the two companies. Under its terms, 7% of the shares held by certain members of Elevate's management team may be rolled over into equity of the acquiring entity, the companies said.
Park Cities, which is based in Dallas, said that it plans to maintain Elevate's headquarters in nearby Fort Worth.
"Elevate fills a massive void in the lending market, both through its suite of credit solutions and its powerful [artificial intelligence]-driven technology platform," Park Cities Managing Partner Alex Dunev said in the press release. "I am confident that we can help advance the company's vision while it maintains its commitment to serving the nonprime consumer."
A Park Cities spokesperson did not respond to an interview request. An Elevate spokesperson declined an interview request, but said that the company will provide an update when the transaction closes.
