Samsung is one of the largest manufacturers of mobile phones in the world, currently holding 30% market share in the UK. As devices have become more expensive, demand for handset finance has increased materially, particularly when 0% APR financing options are provided
Highly granular portfolio of super prime consumer loans, secured across 300k individual exposures with high credit scores and low evidenced default rates. To drive demand Samsung offer interest free financing with Glow returns driven by receiving discounts to the capital balance. The margins negotiated are highly attractive (~12% yield) given the super prime underlying credit (~0.5% historical loss rate). Citi’s senior facility is keenly priced (S+1.6%) creating significant excess profit that is junior to our capital (11%) in addition to the cash equity. Pollen Street’s facility can withstand in excess of 10x increase in base case losses before our interest is impaired. This stress is more than double the stresses applied in AAA rating stresses applied to UK consumer ABS (typically 5x). 16% Gross expected IRR. Very attractive risk adjusted returns. The facility is expected to deliver gross IRR of 16% and MOIC of 1.45x. 0% / 0% Cost / Total Value
Fixed and floating charges over the Borrower Collection Account, Funding Account, all receivables, real property & IP. SPV is bankruptcy remote with a third-party servicer, allowing for a seamless run-off in the unlikely event of financial difficulty. Comprehensive Bad acts guarantee provided by the Parent providing additional recourse beyond the SPV assets.
Glow is a UK consumer lender focused on white label partnerships with telecom businesses and device manufacturers to provide point of sale financing for handset sales around the world. Glow partnered with Samsung UK in 2021, providing a white label solution called Samsung Finance. Customers are given the opportunity to pay for their Samsung goods with Samsung Finance at the check-out. Glow has since originated in excess of £250m through the Samsung Finance to prime customers. Loan performance has been extremely strong with ~0.5% loss rates.
– Citi advance 87.5% against the eligible loan receivables at S+140bps.
Senior Exposure (Citi)
– PSC will advance from 87.5 to 95% with 5% of subordinated cash equity coming from Glow.
Key Statistics Facility
87.5% / 76.5%
– Underlying facilities yield 12% (through discount from Samsung) and generate significant excess spread with very low and stable loss rates given super prime profile of the customers.
Mezzanine Facility
Mezzanine Exposure (PSC)
Country Exposure
UK
95% / 84%
Equity
Industry
Unsecured Consumer Credit
100% / 89%
– Profits create an additional 11% of subordination.
£20m committed + £20m accordion
Investment
Excess Spread
Na / 100%
Sourcing
Direct
Past performance is no indication of future results. There can be no assurance that the Fund will achieve its objectives or avoid substantial losses. Please also refer to the Disclaimer and Track Record Notes at the back of the presentation The following data is based on internal PSC calculations, not all of which have been audited, and is subject to change. Actual results may differ from the results presented. Gross performance results are shown gross of investment management and performance fees, as well as all organisational and ongoing fund fees, costs and expenses (including audit and depository services). Return targets and structural protections are intended to be indicative. There can be no guarantee that any or all of the prospective investments will meet these investment criteria or that the target returns are achieved. The target returns are premised on a number of factors number of factors including prior investments made by funds managed or advised by Pollen Street and opportunities that Pollen Street is currently seeing and/or expects to see in the future, and assumptions with respect to the Fund's portfolio investment returns and the costs and expenses applicable to the Fund which are inherently uncertain and are subject to numerous business, industry, market, regulatory, geo-political, competitive and financial risks that are outside of Pollen Street's control. There can be no assurance that the assumptions made in connection with the target returns will prove accurate, and actual results may differ materially, including the possibility that an Investor may lose some or all of any invested capital. The inclusion of the target returns herein should not be regarded as an indication that Pollen Street or any of its affiliates or their respective representatives consider the target returns to be a reliable prediction of future events, and the target returns should not be relied upon as such target returns are neither a forecast nor a guarantee. Neither Pollen Street nor any of its affiliates or any of their respective representatives have made or make any representation to any person regarding the target returns and none of them intends to update or otherwise revise the target returns to reflect circumstances existing after the date when made or to reflect the occurrence of future events, even in the event that any or all of the assumptions underlying the target returns are later shown to be incorrect.
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