Affinity Equity Partners is preparing to launch a sale process for its non-bank lender, ScotPac, with expectations of exceeding $1 billion. This follows a year of heightened interest from financial investors and strategic buyers, as the firm aims to capitalize on ScotPac’s strong market position.
ScotPac, which operates as one of Australia’s largest non-bank lenders to small and medium-sized enterprises (SMEs), boasts a loan book of approximately $3 billion and a network of around 2,000 brokers. The company has recently circulated information packs to domestic and offshore investors, highlighting its reputation as a “high-quality, technology-enabled credit platform.” Under the leadership of Chief Executive Officer Jon Sutton, the firm has established a “hard-to-replicate competitive moat” across Australia and New Zealand.
The comprehensive product offerings of ScotPac include working capital, asset finance, business lending, and property finance solutions, serving over 9,000 business customers. The company differentiates itself from competitors such as Shift, Dynamoney, MoneyTech, and Earlypay. Notably, more than 60 percent of ScotPac’s net profit after tax is generated from its working capital division, followed by asset finance at 25 percent.
Investors have been informed that ScotPac generates more than $100 million in pre-tax profit and has enjoyed a double-digit revenue compound annual growth rate over the past five years. Additionally, its loss rate remains impressively low, below 1 percent.
Affinity Equity Partners took ScotPac private in 2018 for $612 million and successfully refinanced its debt last year after securing commitments from Bain Capital Credit, IFM Investors, and MA Financial. The upcoming market entry comes at a time when non-bank lenders are increasingly attracting attention, exemplified by Brookfield’s proposed $2.5 billion sale of La Trobe and the ongoing interest from Humm’s founder, Andrew Abercrombie.
The demand for private credit and SME lending is rising, supported by stable funding markets, buoyant credit conditions, and appealing yield profiles. Despite this positive outlook, some uncertainty persists within the sector. As part of its sell-side strategy, UBS has indicated that SME lending is one of the most attractive segments of the Australian credit market, as businesses increasingly turn to non-bank lenders for financing due to their speed and flexibility.
As Affinity Equity gears up for this significant sale process, the outlook for ScotPac remains robust, reflecting the growing appetite for non-bank lending solutions in the market.
