Sunday 19 January 2020

Hedge fund manager Magnetar snaps up two thirds interest in First Citizen Finance for €28m

Magnetar manages $7bn worth of funds (Stock picture)
Magnetar manages $7bn worth of funds (Stock picture)

Gretchen Friemann

US hedge fund manager Magnetar Capital has snapped up a two thirds interest in the automotive financing company, First Citizen Finance, for €28m.

Chris Hanlon, the former CEO of PTSB Finance, who established the business five years ago will retain the remaining 33pc stake.

Under the terms of the deal, Magnetar, which manages $13bn worth of funds, is providing a €42m working capital facility, bringing the deal's value to €70m.

Magnetar's majority ownership in the company comes after a lengthy involvement with First Citizen. The US hedge fund backed the company's auto origination platform in January, committing cash to a senior loan facility.

While this latest equity injection delivers control to the US opportunist, the working capital line runs until 2020, raising the possibility of a trade sale of potential initial public offering of First Citizen as Magnetar hunts down a potential profit on its investment.

The hedge fund's partial takeover of First Citizen, which also operates in agri and SME equipment finance, comes as Ireland's economy roars ahead, while the ill-effects of the financial crisis continue to recede amid rising employment and robust consumer spending.

First Citizen's business was formed from PTSB Finance operations divison - the lender's asset financing arm - in a €287m management buy-out deal backed by Deutsche Bank.

While the company has yet to regain the scale it possessed under the bank's ownership, when it was processing an average of 100,000 applications per annum for credit, it has made steady gains since it began writing loans in 2014, processing more than 61,000 loan applications with a value of close to €1bn.

Alan Shaffran, Head of Fixed Income for Magnetar in Europe said, "First Citizen has been a steadfast partner since 2014. We mutually agreed that Magnetar’s investment in First Citizen would be the best way to support their continued growth. The company has an experienced team of professionals with an outstanding track record of operational excellence and we look forward to identifying new opportunities to develop attractive financial products in order to continue to grow First Citizen’s business."

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