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Wes Edens purchases his third company — in a week

By
Kevin Dugan
Published March 3, 2015, 10:52 p.m. ET

Wes Edens wants to be the newest subprime scion.

Edens — founder of Fortress Investment Group and owner of the NBA’s Milwaukee Bucks — made his third debt-related acquisition in about a week on Tuesday when his lending company announced it was buying Citigroup’s OneMain for $4.3 billion.

The all-cash purchase by Springleaf Financial is expected to close in the third quarter of this year, and would make it the largest consumer-finance company — and subprime lender — in the country, with nearly $14 billion in receivables and almost 2,000 branches throughout the US.

The purchase comes just eight days after two other Edens companies made separate acquisitions of holdings formerly owned by Bill Erbey, the ex-chairman of mortgage servicing company Ocwen, who was recently forced to step down from his position after a two-year investigation.

“I always think of Fortress as the one group that steps forward when everyone is running,” Henry Coffey, analyst at Stern Agee & Leech, told The Post.

The acquisition announcement sent SpringLeaf’s stock soaring, ending the day up 32 percent to close at $50.23.

Wes EdensGetty Images

That jump is a boon for Fortress, which owns about 80 percent of Springleaf. The company’s stake, valued at about $3.69 billion, is almost 29 times the $125 million Fortress paid for its initial stake.

Edens’ run of acquisitions comes as household debt in the US reached $11.7 trillion at the end of last September, about $1 trillion from all-time highs, with loans for autos, credit cards and schools driving the increase, according to the most recent data from the Federal Reserve Bank of New York.

Edens’ debt empire is spread across several companies. Springleaf makes consumer loans for autos, as well as mortgage modifications. Nationstar Financial is the second-largest non-bank mortgage servicer in the US, and New Residential is a real estate investment trust.

The combined company would cater to people with FICO scores between 500 and 750 — a range that covers roughly 60 percent of borrowers, with about half of those loans qualifying as subprime, according to Springleaf’s announcement.

“You can’t overstate the importance of these branches to mainstream America for their financing needs,” Edens said during a conference call with analysts.

Investor exuberance could have been in part because of the unexpectedly low purchase price, Coffey said.

“People have been analyzing this thing from the point of view of [an] $8 [billion] to $9 billion [sale],” he said.