Former TD Ameritrade CEO and chairman Joe Moglia's SPAC just announced plans to acquire fintech OppLoans in a deal valued at $800 million
- Former TD Ameritrade CEO and chairman Joe Moglia’s SPAC announced plans to acquire fintech OppLoans.
- OppLoans, now known as OppFi, facilitates small-dollar personal loans to credit-challenged consumers.
- OppFi is looking to facilitate more than just personal loans, building out in areas like credit cards.
- Visit the Business section of Insider for more stories.
TD Ameritrade’s former top executive has found a target for his so-called blank-check company.
Joe Moglia’s special purpose acquisition company, FG New America Acquisition Corp., announced plans to acquire fintech OppLoans, now known as OppFi, on Wednesday in a deal valued at approximately $800 million.
Moglia, who is the former chairman and CEO of TD Ameritrade and a former college football coach, is the founder and chairman of investment firm Fundamental Global, which owns FGNA. The SPAC, which Moglia is also the chairman of, raised $225 million in its public listing last October. FGNA had planned to acquire a company in finance or insurance valued between $300 million and $600 million, according to federal filings.
“Any success I’ve ever had in my career, football, personal, and business, has been because I made a decision, a bet, an investment, on people,” Moglia told Insider.
Founded by Schwartz Capital in 2005, OppFi primarily serves subprime borrowers with no or thin credit scores. Jared Kaplan, who joined as CEO in 2015, will remain in his role following the closing of the deal.
However, the former TD Ameritrade executive has offered his expertise as well.
“I have committed to working with Jared and the board and the founding family to help wherever I can possibly help,” Moglia said. “If they’re thinking about an M&A opportunity, that would be something they’d probably like my opinion on.”
OppLoans is now OppFi, looking to do more than personal loans
OppFi’s niche is the segment of consumers that can’t access credit through traditional channels. For every loan application, OppFi offers to do a check on a consumer’s behalf to see if they qualify a near-prime loan with traditional lenders. 92% of the time, applicants don’t get any offers, Kaplan told Insider.
Consumers who aren’t able to access credit through traditional channels, like credit cards and bank loans, often turn to payday loans to make ends meet. Borrowers are often charged fees on low-dollar payday loans, the cost of which translate to an average rate of around 400%, according to the CFPB.
OppFi aims to serve as an alternative to payday loans, lending as much as $4,000 at rates between 99% and 199%. OppFi’s average loan size is around $1,500 lent for 11 months. It doesn’t charge any fees, including origination, prepayment, or late fees.
“That population has no other options,” Kaplan said, “whereas with our bank partners, we’re able to really see through that traditional credit score and get them something that helps them in a really difficult situation.”
While it started as a direct lender — it still offers installment loans in 13 states — OppFi has since pivoted to a partner banking model, facilitating and servicing loans on behalf of community banks.
Powered by OppLoans enables banks themselves to issue small-dollar loans to credit-challenged customers. OppFi manages the marketing, customer acquisition, and loan servicing for the banks.
“They had the wisdom to understand that that sophisticated strategy is not what you execute. You execute a simplified version of that,” Moglia said.
“Then you have a competitive advantage in the market niche you choose to participate in,” Moglia said.
The fintech’s rebrand from OppLoans to OppFi indicates Kaplan’s ambitions beyond personal loans. OppFi is currently building an earned wage access-like product, lending to consumers and getting repaid via payroll deduction. And in the second half of this year, OppFi will launch its own credit card.
“That’s the perfect graduation product for someone that took an installment loan, has proved their ability and willingness to repay, and now can get traditional mainstream credit,” Kaplan said.
Moglia had a non-traditional route to Wall Street
Moglia doesn’t cut the usual profile of a finance executive.
He started his career as a football coach, spending time as an assistant at various high schools and colleges. In 1984 he switched gears to finance, joining Merrill Lynch and entering its MBA training program. Moglia would spend nearly two decades at the firm.
In 2001, Moglia joined what was then-known as Ameritrade, where he served as CEO until 2008. He stepped down from his role that year and transitioned to serve as chairman of TD Ameritrade.
He also began coaching college football again, spending seven seasons as the head football coach at Coastal Carolina.
He stepped down from his role as chairman at TD Ameritrade last October after rival Charles Schwab acquired the broker for $22 billion.
Now with Moglia in his corner, Kaplan sees opportunities to extend OppFi into mobile banking, point-of-sale lending, and mortgages.
“Joe’s experience is, for me and for the business, game-changing,” Kaplan said. “On top of all of that, we can defend a spread offense now, because we’ve got coach on our side.”
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