KING OF PRUSSIA, PA — PowerPay, a provider of real-time lending and payment solutions, has successfully closed its first securitization, marking a significant leap forward in its operational capabilities and financial strategy. This inaugural securitization, achieved in partnership with CapitalOne Securities and Chartway Federal Credit Union, based in Virginia Beach, VA, not only highlights PowerPay’s robust growth trajectory since its inception but also sets the stage for its enhanced engagement with capital markets.
Mike Petrakis, the Founder and CEO of PowerPay, expressed enthusiasm over this development, noting, “The transaction provides the Company a securitization program that will allow us to obtain access to capital markets while providing a diversified funding source to fuel continued growth for the foreseeable future.” He further acknowledged the vital role of Chartway Federal Credit Union as a valued partner in this endeavor and hinted at the prospects of accessing public securitizations regularly as market conditions improve.
Founded in 2020 and headquartered in King of Prussia, PA, PowerPay has swiftly ascended to become a frontrunner in point-of-sale financing, particularly within the home improvement and elective medical sectors. The company’s platform facilitates transparent purchases into simple monthly payments, offering a seamless financing solution for consumers and channel partners alike.
The securitization, labeled PWRP 2024-1, aggregates to approximately $118 million and comprises Class A, B, and C notes, which have been rated A-, BBB, and BB-, respectively, by the Kroll Bond Rating Agency. This strategic financial maneuver is designed to diversify PowerPay’s funding sources and solidify its foothold in the capital markets, thereby enabling the company to sustain its growth momentum.
A noteworthy aspect of this securitization is PowerPay’s innovative approach to originating loans through its partnership with credit unions. In this instance, PowerPay originated loans to Chartway Federal Credit Union and subsequently repurchased them through the PWRP 2024-1 securitization. This model not only exemplifies PowerPay’s commitment to fostering strong partnerships with credit unions but also showcases its ability to develop an Asset-Backed Securities (ABS) platform that serves as a viable liquidity management tool for its credit union and bank partners.
The successful issuance of PWRP 2024-1 attracted 17 new institutional investors to the platform, a testament to the growing institutional support for this asset class and PowerPay’s role in facilitating access to financing for home improvement and elective medical procedures.
The implications of PowerPay’s first securitization extend beyond the immediate financial benefits for the company. This milestone represents a broader shift within the fintech industry, where companies like PowerPay are leveraging capital markets to secure diversified funding sources, thereby enhancing their capacity to meet the evolving needs of consumers and partners. Moreover, it signals the increasing institutional interest in innovative financing solutions that address specific market segments, such as home improvement and elective medical financing.
As PowerPay continues to navigate the complexities of the fintech landscape, its successful foray into securitization not only validates its business model but also positions the company for future growth and expansion. The ability to access capital markets on a regular basis could enable PowerPay to scale its operations, innovate its product offerings, and ultimately, contribute to the democratization of financing solutions in underserved sectors.
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