OppFi Acquires Stake in Bitty, Expanding into Small Business Financing Market
Date – 01-Aug-2024
Under the leadership of Craig Hecker, a recognized industry leader, Bitty has established itself as a profitable and expanding platform that offers credit access to underserved small businesses.
The transaction reflects a purchase multiple of 6.0x on adjusted net income for the trailing twelve months ending March 31, 2024, and is anticipated to immediately enhance OppFi’s earnings.
OppFi plans to keep exploring strategic acquisition opportunities in both new and existing sectors to further enhance credit access.
OppFi Inc., a tech-driven specialty finance platform dedicated to expanding credit access for everyday Americans, has announced its strategic acquisition of a 35% equity stake in Bitty Advance, including its servicing business (collectively “Bitty”). The deal includes options for OppFi to secure majority and full ownership over time.
Craig Hecker, an industry leader and serial entrepreneur in small business financing, who will remain as Chief Executive Officer of Bitty, currently holds the majority control of the company. Bitty specializes in revenue-based financing and working capital solutions, having provided funding to over 29,000 small businesses across the U.S. since 2020, with loan amounts ranging from $2,000 to $250,000.
“We are excited about this acquisition as it paves the way for OppFi to enter the small business financing sector,” said Todd Schwartz, Chief Executive Officer and Executive Chairman of OppFi. “Bitty’s focus on credit access for underserved small businesses aligns perfectly with our mission. With the shift towards online small business financing, Bitty’s digital platform is poised to capitalize on this trend. We look forward to leveraging OppFi’s expertise in data analytics, automation, and marketing to scale Bitty’s operations.”
According to the U.S. Small Business Administration, there are approximately 33 million small businesses in the U.S. A Federal Reserve study reveals that about 71% of medium to high credit risk small business loan applicants turn to non-bank lenders, online lenders, or community development financial institutions. Research from the Consumer Financial Protection Bureau estimates the annual addressable market for non-bank and online small business lenders at around $550 billion.
“I am excited to partner with OppFi and leverage its successful track record to accelerate Bitty’s growth,” said Craig Hecker. “OppFi’s vision of creating a multi-product, multi-customer platform for credit access aligns with our goals.”
Annually, OppFi expects Bitty to contribute approximately $0.03 in adjusted earnings per share to its consolidated results. OppFi has the option to acquire an additional 30% equity interest to achieve majority ownership in 2027 and to acquire the remaining equity for total ownership by 2030.
Further details about the transaction will be available in the Company’s Form 8-K filed today with the U.S. Securities and Exchange Commission. OppFi management will discuss the transaction and answer investor questions during the second quarter 2024 earnings conference call scheduled for Wednesday, August 7, 2024, at 9:00 a.m. ET.
