Platform for buying and selling used cars online vroom unveiled the price of its first $296 million auto loan securitization offering, the company said in a statement. Press release Thursday (February 10).
Vroom said the securitization is a private offering, which will see its recent acquisition of the vehicle finance company United Automobile Credit Corporation (UACC) selling approximately $281.35 million of its rated notes.
“This transaction is an exciting first step in integrating UACC’s strong reputation and AAA ratings into Vroom’s long-term strategic goals,” Paul HennessyCEO of Vroom, said in the press release.
Ultimately, Hennessy said, UACC’s in-house financing capabilities will enable Vroom to provide “a superior digital car buying and lending experience, offering new ways for existing partners and new investors to access Vroom’s loan portfolio and allow us to fully participate in the loan economy, move Vroom from a 100% indirect model to a fully captive model which has the potential to accelerate our sales velocity and deliver significant improvement in gross profit to our shareholders.
Read more: Auto eTailer Vroom Completes Acquisition of United Auto Credit
Vroom said the transaction is UACC’s 13th securitization and its first since Vroom completed its acquisition of the finance company on Feb. 1.
Hennessy said last week that the purchase was crucial in helping Vroom build a “captive finance business that allows us to serve customers across the credit spectrum” and help it access additional business solutions.
“By integrating an auto lender like UACC, with a wealth of expertise in the non-preferred space, Vroom will be able to serve a larger portion of the customer base,” Hennessy said. “We believe this will result in greater effectiveness of our marketing efforts and allow us to scale the business faster.”
The deal saw over 500 UACC employees join Vroom, including UACC’s CEO Jim Vagim and financial director Ravi Gandhi. Vroom said Vagim will continue to operate UACC’s third-party finance business, while Gandhi will play a key role in Vroom’s captive finance arm.