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October 10, 2014  

Subprime Auto Lender Maps Issuance Routine

A fledgling subprime-auto lender led by a group of industry veterans has secured a warehouse line with an eye toward securitization as a long-term funding source.

FlexPath Capital of Palm Harbor, Fla., worked with investment bank Kimberlite Advisors to arrange the $135 million credit facility from AllianceBernstein. FlexPath anticipates issuing asset-backed bonds to replenish the warehouse line, with an initial bond offering expected in about 18 months. Thereafter, the lender would tap securitization on a routine basis, a banking source said.

The business is taking shape as subprime lenders face heightened scrutiny from regulators including the Consumer Financial Protection Bureau over concerns about lax underwriting practices. For its part, FlexPath claims to be adopting conservative lending standards including low debt-to-income ratios.

FlexPath was founded in 2012 by former Sanford Bernstein executive Peter Sayer. The firm’s management team also includes Joe Scimone, who spent 23 years at Chase Auto Finance, including a stint as president; Jon Eisenstein, formerly the chief technology officer at GE Money; and Oxford Resources alumnus Michael Danzi. Oxford, once the largest auto-leasing business in the U.S., was bought by Barnett Banks in 1997 and subsequently was absorbed by Bank of America.

FlexPath’s chief operating officer is Bob Blatz, formerly president of senior-housing REIT American Land Lease.

The management team, based in Port Chester, N.Y., has spent the past two years creating a technology framework for the lending program and establishing a network of independent auto dealers in Florida, along with Connecticut, New Jersey, New York, Pennsylvania and other states in the Northeast. Prior to securing the credit line, the founders used their own money to fund the business.