Younited Secures an Asset-Backed Financing Line Dedicated to Italy from Citi

Younited, a French fintech platform specializing in loans to individuals across Europe, has signed a multi-year asset-backed financing agreement for Italy with Citi. In other words, Younited’s new personal loans in Italy. will be acquired by a securitization vehicle that will issue asset-backed notes that Citi has already committed to underwrite (partly-paid note abs). The size of Citi’s commitment was not disclosed, but it was specified that this is the largest financing transaction structured by Younited.

Younited, founded in 2009 initially under the name Prêt d’Union by Thomas Beylot, Charles Egly, and Geoffroy Guigou, took two years to obtain a banking license in France and then began operations transalpine in 2011. In Italy, it then opened a branch in Milan in April 2016, authorized by the Bank of Italy. Currently, the scaleup operates in five European countries where it has obtained a banking license (France, Italy, Spain, Portugal, and Germany) and generates a GMV (Gross Merchandise value, i.e., total receivables originated on the platforms) of about €2 billion a year.

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Younited business model

The business model involves an asset-light scheme whereby banking institutions and institutional investors (asset managers, pension funds, insurance companies), are offered the opportunity to finance loans originated by Younited, aiming for a return commensurate with the risk for a short-term asset class (about 2 years) generally considered attractive by investors of this type. Loans are up to €50,000 and up to 84 months and are disbursed immediately.

The French company plans to accelerate its growth in Italy, which is its second-largest market after France, where it has become a major player in online personal loans, through its direct channels and through distribution agreements with local financial institutions. Younited has, in addition, expanded its channel of partnerships (B2B2C) with merchants with partners such as Apple Premium Resellers, Microsoft, and, most recently, telecommunications company Iliad.

This is not the first time Younited Credit has structured a financing solution dedicated specifically to business development in Italy. In June 2018, just over two years after opening offices in Italy, Younited Credit launched an alternative debt fund dedicated to investing in securitizations of loans to individuals offered on the Italian fintech platform.

The fund, called FCT Younited Italy, is managed by French asset manager EuroTitrisation

The latter is a French asset manager specializing in the debt sector, which already in France then managed for Younited Credit the five sub-funds of the FCT Younited France fund dedicated to investments in personal loans provided through the French platform. The funds in question, in detail, invest in securities derived from the securitization of those loans. They are open-ended funds, but accessible only to private professional and institutional investors.

The French fund, for example, was subscribed at the time by insurance group Aegon and asset managers Zencap, Eiffel Investment Group, and Hexagone Finance. While in November 2019, insurance companies Admiral Group (a leader in car insurance in the United Kingdom), Suravenir (a French insurance company that is part of the Credi Mutuel Arkéa group), and Matmut (a French insurance company active in property and casualty insurance for individuals and businesses) had invested in both funds launched by Younited.

Younited Credit followed up with a €300 million Italian forward-flow deal with British asset manager M&G Investments in 2021. Under the deal, the M&G-managed funds initially purchased a portfolio of consumer loans generated in Italy totaling €180 million from Younited and acquired additional loans worth another €120 million at a later date.

That transaction in turn followed the first securitization structured by Younited Credit, conducted in 2019, which had also been the first public securitization carried out by a fintech in continental Europe. At the time, a €156 million portfolio of French loans had been securitized through the securitization vehicle Youni 2019-1, with the senior tranche receiving AAA ratings from S&P and Aaa from Moody’s.

Returning to the new securitization transaction, Xavier Pierart, chief financial officer of Younited, announced, “We are delighted to conclude this deal with Citi and to continue to demonstrate the quality of our growing origination business in Italy and Younited’s ability to evolve and adapt its platform to the current macroeconomic environment. This transaction will allow us to accelerate growth in one of our key markets with an attractive risk/return profile.”

“This important agreement will support Younited’s development in the coming years, following a solid 2022 marked by a 71 percent growth in GMV,” said Stefano Piscitelli, CEO of Younited Italia from September 2022. Piscitelli, in an interview with Economy Up, had said, “The Italian market has an increasingly important weight for us, representing 25 percent of the business globally.”

After all, according to a pan-European study conducted by MixFactory on behalf of Younited, nearly half of Italians take out a loan to deal with an unexpected event. Piscitelli added, “We are therefore targeting a very large audience, theoretically extending to all adult individuals with a demonstrable ability to repay, which also includes profiles with no financial history. Not only that, many individuals apply for multiple loans over a lifetime.”

Fintech has been present in Italy since 2016 and has evolved with significant growth rates: in 2022, the number of loans disbursed increased by 77.1 percent compared to 2021; gross merchandise value grew by 88.6 percent; and the forecast for all of 2023 is for further improvement. In terms of headcount, the company’s number of employees over the past year has grown by 14.5 percent in the face of a consumer credit market that is returning to pre-pandemic levels.

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(Featured image by Adeolu Eletu via Unsplash)

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First published in Be Beez, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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