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On Deck Closes Agreement to Merge OnDeck Canada & Evolocity

Zacks Equity Research

On Deck Capital ONDK has closed the transaction to combine its Canadian operations with Evolocity Financial Group, a small business lender based in Montréal. The deal was announced in December 2018.

Since 2010, Evolocity has provided finance of more than CAD$240 million to small businesses in Canada. It uses proprietary risk scoring models, data aggregation and electronic payment technology, along with Canadian credit and financial performance data to underwrite and facilitate small business financing.

Though the financial terms have not been disclosed, On Deck has made an additional cash investment to retain a majority interest in the new combined entity. Notably, On Deck Canada and Evolocity have each contributed their business operations and assets.

Per the terms, the business will operate under the existing On Deck Canada name, post integration.

Further, local operations, technology and Canadian underwriting expertise of Evolocity have been combined with the marketing, business development and international online lending experience of On Deck to provide innovative financing options to small businesses in Canada.

Co-founders of Evolocity, David Souaid and Harley Greenspoon, will serve the combined company’s management as chief revenue officer and chief operating officer, respectively.

Noah Breslow, chairman and chief executive officer of On Deck said, "As one of Canada's leading online lenders to the crucial small business sector, we are well-positioned to provide financing options that will benefit Canadian small business owners from coast to coast."

On Deck remains focused on developing its operations through strategic initiatives. In December 2018, it announced plans to offer equipment loans in 2019, thereby opening new income avenues.

The stock has gained 8.7% over the past year against the industry’s decline of 6.8%.

On Deck currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the same space are Euronet Worldwide, Inc. EEFT,Oaktree Specialty Lending Corp. OCSL and Consumer Portfolio Services, Inc. CPSS. All these stocks carry a Zacks Rank #2 (Buy).

Euronet’s Zacks Consensus Estimate for current-year earnings has been revised nearly 1% upward in the past 60 days. Also, its share price has increased 50.3% in the past three months.

Oaktree’s current-year earnings estimates have been revised 9% upward over the past 60 days. Further, the company’s shares have jumped 20.1% in the past three months.

Consumer Portfolio Services’ Zacks Consensus Estimate for current-year earnings has been revised 9.8% upward over the past 60 days. Moreover, in the past three months, its shares have gained 7.1%.

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