Loan portfolio work-out

The challenge

Our client, a leader in the financial services industry, was looking into acquiring a French company specialized in providing financial lease solutions in the B2B segment.

Our client wanted to understand more precisely into the characteristics and quality of the loan portfolio it was looking to acquire and drivers of revenue generation in order to challenge revenue forecast included in the business plan that was shared by the sell-side.

Ultimately they needed to establish to what extent should these factors influence their bid price.

The outcome

We combined several large data set over a period of 5 years.

The first phase of our work consisted in obtaining and compiling several data sets: customers, engagement, partnerships, representative and historical flows.

We built a dynamic tool which enabled our client to drill-down through the entire loan portfolio and identify drivers of performance.

We also assisted our client in building a model for prospective capital, principal and interests of over 200k contracts which allowed to forecast in detail revenue and balance sheet over the contract lifetime.

Our analyses helped our client challenge the high-level business plan provided by the sell-side with a granular unwinding of the existing portfolio and projections of new loans/claims based on detailed analysis of the contracts by agency, channel or vintage.

This gave our client was able to get leverage over the price negotiation and get an idea of the commercial strategy to be implemented post-acquisition.