Wisr eyes European market

Non-bank lender Wisr is said to be wading into Europe’s consumer finance market.

The deal will give Wisr exposure to the European financial wellness industry. Picture: iStock.

Non-bank lender Wisr is said to be wading into Europe’s consumer finance market, with an investment in fintech wellness group Arbor.

The Australian understands ASX-listed Wisr is utilising a convertible loan structure, and making a small upfront cash payment, which would see it secure a minority shareholding in venture capital-backed Arbor. Sources said the transaction terms, which are still subject to due diligence, could see Wisr increase its stake in Arbor to about 45 per cent over coming years.

A Wisr spokeswoman declined to comment.

Arbor is backed by venture capital firms including New York-based FinRebel Group and The Tifin Group, and Sydney-based Apex Capital Partners. The company pitches itself as a wellness platform that assists users to save, invest and reduce debt, and its website says its security functions facilitate entry with fingerprint, password or PayPal.

Wisr also has a focus on financial wellness initiatives for its customers, including a credit score comparison platform, data to expedite the paying down of debt and financial literacy services.

In February, the local company said it was targeting a combined personal and auto loan book of $1bn, and noted there was a “clear path” to profitability.

Wisr is likely attracted to the new investment by the size of the $1.7 trillion European market for consumer finance and common ground between it and Arbor.

Arbor — founded in 2017 — makes subscription revenue, and lending income through its digital lending business. It also recently launched an ethical loan product.

But investors will want to understand the rationale for Wisr’s investment in Arbor, and the opportunities and risks associated with the European push and any broader expansion globally.

Last year, consultants Bain & Company highlighted that revolving credit, instalment products and other parts of the consumer finance market were one of the last “profitable niches” in retail banking in Europe.

Wisr’s losses narrowed to $9.36m in unaudited interim results for the six months ended December 31, from $12.85m in the same period a year earlier. Operating revenue surged 354 per cent in the half, as operating expenses climbed 59 per cent over the period.

Many smaller players have, however, struggled to generate scale in Australia’s lending market given fierce competition from the incumbent banks and other lenders. The market for digital personal loans outside the big banks includes a string of players such as newly listed firms Plenti and Harmoney.