General Motors Financial is aiming to double its portfolio and liabilites worldwide while transacting up to six securitisations and increasing its inventory finance facilities and unsecured debt issuance in 2013.
GM Financial, formed in 2010 by GM after the sale of previous captive provider GMAC to Ally Financial in 2006, is set to acquire the majority of Ally’s international car finance operations, including GMAC UK, by the middle of this year.
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So far, GM Financial has already performed one subprime securitisation and has plans for a further three to five asset-back securitisation deals by the end of 2013, said Chris Choate, chief finance officer at GM Financial, during a conference call to discuss the firm’s full-year financial results.
The company’s weighted average cost of capital has already dropped to 1.2% for the $1bn (£662m) securitisation from 1.4% for a similar size transaction in November, according to Auto Finance News.
International operations
As previously reported, the £4.2bn acquisition of many of Ally’s national car finance operations in Europe, Latin America and China includes $2bn of capital supplied by GM to boost equity and ensure a pro-forma capital structure.
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By GlobalDataThe purchase will be part-funded by excess liquidity, including £1bn from unsecured debt issuance in August 2012, plus sales of unsecured debt.
With the acquisitions, GM Financial is aiming to increase its ratio of earning assets to tangible equity from four-fold in mid-2012 to between six- and eight-fold.
As such it expects its global portfolio to rise from $16bn to $33bn, with liabilities rising from $15bn to $27bn. Within that, GM-related assets should rise from 40% to 70%.
Dan Berce, president and chief executive of GM Financial, said the prevalence of prime and commercial lending in Europe and Latin America would alter the "geographic, credit-related and retail and commercial diversity of our earning assets", with prime retail assets accounting for 40% of the company’s earning assets, commercial assets in the "mid-teen percentage" and subprime accounting for a "much smaller portion".
Ally’s international management would also transfer to GM Financial, Berce confirmed, to ease the stage-by-stage transition and closure of accounting systems and treasury functions.
American warehouse facilities
In the US, domestic market of GM Financial, where car loans have recently hit a record term length and where Santander Consumer USA has taken on the running of Chrysler’s captive finance from GMAC, the company is now looking to extend its inventory finance deals.
GM Financial plans to add inventory capacity to support its US market as well as that of Canada, where Ally’s operations were acquired by the Royal Bank of Canada.
In January, the company renewed a $600m US lease inventory facility until May 2014. At the end of 2012, GM Financial had $354m outstanding on £3.9bn committed in inventory credit facilities.
richard.brown@timetric.com
