Car finance firm raises €30m through debt sale

Bluestone Asset Finance, a financial services group, has raised €30 million by refinancing car loans after selling bonds on the open market.

This is the company's third asset backed security issuance in Ireland.

The portfolio is made up of 2,505 loan agreements relating to a mix of new and used motor vehicles and other commercial equipment on which Bluestone issued finance in 2016 and 2017.

This latest securitisation of a Bluestone loan portfolio has been made through a designated activity company called Topaz Asset Finance 2017-A1.

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According to the company's managing director for Ireland, Donal Murphy, the finance house has provided more than €80 million in finance since 2015 through its network of over 500 dealers.

“We continue to see strong demand from our dealership partners for financial solutions designed to support customers who for a wide range of reasons are electing not to access credit from the pillar banks, or who have been denied that access,” said Mr Murphy.

Bluestone describes itself as a lender to customers who are “self-employed, have little or no credit history or who experienced financial difficulties during the financial crisis but can now demonstrate a stable income.”

This type of customer is not considered to be a prime lendee. However, Bluestone says that it adopts a prudent underwriting philosophy to ensure each applicant’s circumstances are properly understood.

Growing volumes

Despite a sales dip in Ireland’s new car market, Bluestone has been growing volumes. Some 90 per cent of its loans in the portfolio just securitised were written in the used-car market, a market that Bluestone believes is buoyant.

Bluestone, which is unregulated in Ireland on the basis that it falls outside of the remit of the Central Bank, has been operating in the Irish market since 2011 when it bought a €350 million asset finance portfolio from Bank of Scotland. The company's asset finance lending business launched in late 2014 and distributed products through motor dealers and financial brokers.

In the year to the end of June 2016, the company made a pre-tax loss of €728,979. However, that was softened slightly by an income tax credit which brought the company’s total loss to €622,176. Additionally, the company had net liabilities at the end of June of €444,141.

A company spokesman said that it has been profitable since December 2016 and that the loss to the end of June was caused by a change in the company’s business model. Originally the company focused on servicing loans in the portfolio purchased from Bank of Scotland and launched its asset finance lending business in 2014.

Bluestone is owned by a mix of private and institutional shareholders including LDC, a wholly owned subsidiary of Lloyds Banking Group, Australia's Macquarie Bank and Bluestone's management team.