Register with us for free to get unlimited news, dedicated newsletters, and access to 5 exclusive Premium articles designed to help you stay in the know.
Join the UK's leading credit and lending community in less than 60 seconds.
Doorstep lender Morses Club has acquired digital current account provider U Holdings through its fully owned subsidiary Shelby Finance Limited.
Editor at Credit Strategy. Previously held roles at Accountancy Age, Accountancy Daily and the Leicester Mercury.
Editor at Credit Strategy. Previously held roles at Accountancy Age, Accountancy Daily and the Leicester Mercury.
Morses Club said the move was “an important step in building a digital offering” to allow its customers to “access credit flexibly”.
There is an initial cash consideration of £5.8m, financed from existing Morses Club cash and debt facilities, and a deferred £5m, payable in cash over the next four years to February 2023, conditional upon certain net profit criteria having been met.
As part of the transaction, Morses Club has acquired U Holdings’ technology and e-money banking platform, as well as its 20,000 current active customers. U Holdings trades as U Account.
Based in Sheffield, U Account provides an agency banking service. As well as providing card services with its current accounts through contactless Mastercard debit cards, U Account also offers in-app features and functionality to “help customers manage their finances more effectively”.
U Account focuses on customers who are “underserved by traditional banks”, offering a current account banking service that allows customers to receive wages or benefits directly, manage their outgoings, and avoid unnecessary bank charges. U Account customers can also deposit cash at one of PayPoint’s 28,000 terminals across the UK and earn rewards from recognised retailers.
U Account has historically been loss-making.
In the year ended February 28, 2019, U Account (then trading under the ownership of Ffrees Family Finance Ltd) generated unaudited revenue of £1.7m and an unaudited operating loss of £4m. However, management expect that post-integration and restructuring, the losses incurred in the remainder of the year will be in the range of £1.4m to £1.7m. They added they are confident that “the acquisition will be earnings accretive thereafter”.
Paul Smith, chief executive of Morses Club, said: "This acquisition represents a fantastic opportunity to enter the rapidly growing online banking market. U Account features the full suite of digital banking services and has grown its customer base to circa 20,000 active customers. U Account’s offering is highly complementary to that of Morses Club, and through this acquisition we expect to deliver significant synergies and cross-selling opportunities.
"This is another exciting step for Morses Club as, consistent with our stated strategy, we continue to diversify our product offering to serve a broader range of customers across the non-standard credit space. Our differentiated use of technology and innovation enables Morses Club’s customers to access a broader range of more flexible and suitable credit."
Get the latest industry news