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Led by proven operator and industry leader Craig Hecker, Bitty is a profitable and growing platform that provides credit access to underserved small businesses
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The transaction implies a 6.0x purchase multiple on adjusted net income for the trailing twelve months ending March 31, 2024 and is expected to be immediately accretive to OppFi earnings
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OppFi expects to continue evaluating strategic acquisition opportunities in new and existing verticals to further facilitate credit access
OppFi Inc., a tech-enabled, mission-driven specialty finance platform that broadens the reach of community banks to extend credit access to everyday Americans, today announced its strategic acquisition of a 35% equity interest in Bitty Advance, including its servicing business (collectively “Bitty”). The transaction includes options for OppFi to obtain majority and total ownership over time.
Bitty is majority controlled by Craig Hecker, an industry leader and serial entrepreneur in the small business financing market, who will continue to operate the business as Chief Executive Officer. Bitty is a credit access company that offers revenue-based financing and other working capital solutions. Since 2020, Bitty has facilitated funding to more than 29,000 small businesses across the United States, with products ranging from $2,000 to $250,000.
“We’re excited by this acquisition, as we believe Bitty provides the foundation for OppFi’s new vertical in small business financing,” said Todd Schwartz, Chief Executive Officer and Executive Chairman of OppFi. “Bitty facilitates credit access to small businesses that are not served by traditional banks, aligning with our mission to facilitate credit access to everyday Americans. Small business financing is increasingly being originated online, and we believe Bitty’s digital platform is well-positioned to capture this growth. We look forward to working with Craig and his team to further scale Bitty with OppFi’s data analytics, automation, and marketing expertise.”
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The U.S. Small Business Administration estimates there are 33 million small businesses, and a study by the Federal Reserve indicates approximately 71% of medium to high credit risk small business applicants for a loan, line of credit, or merchant cash advance applied to a non-bank financing company, online lender, or community development financial institution. The total addressable market for non-bank and online lenders for small businesses is approximately $550 billion per year, based on research from the Consumer Financial Protection Bureau.
“I’m thrilled by this opportunity to partner with OppFi and leverage its successful track record as we strive to take Bitty to the next level of growth,” said Craig Hecker. “I admire OppFi’s vision of building a multi-product, multi-customer platform that facilitates credit access to those not served by traditional banks.”
On an annualized basis, OppFi anticipates that Bitty would contribute approximately $0.03 in adjusted earnings per share to the consolidated results of OppFi.
OppFi has the option to acquire an additional 30% equity interest for majority ownership of Bitty in 2027 and the option to acquire the remaining equity for total ownership of Bitty in 2030.
Additional details regarding this transaction are included in the Company’s Form 8-K to be filed today with the U.S. Securities and Exchange Commission. OppFi management plans to discuss those details and answer investor questions during the previously announced second quarter 2024 earnings conference call on Wednesday, August 7, 2024 at 9:00 a.m. ET.
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