Blackstone-backed subprime auto lender Exeter Finance has filed to go public on the New York Stock Exchange under the symbol XTF, with a Reuters report from last August indicating the business could be valued at more than $1 billion. The firm acquired Exeter from Navigation Capital Partners in 2011, with plans to invest as much as $277 million, while the Irving, TX-based business simultaneously pulled in a $600 million line of credit.
Though it had upward of $3 billion in liabilities as of Sept. 30, 2018, Exeter posted a net income of $57.4 million in the preceding nine months. That marked the second consecutive year the business was profitable, up from $12.1 million in the same period YoY.
Blackstone has been selective about the portfolio companies its taken public of late, with just five PE-backed IPOs over the past three years, per the PitchBook Platform. That marks a stark contrast to the preceding three years, when the New York-based buyout shop took 18 companies public.
Blackstone's recent track record with public offerings has been mixed. A year ago, the firm took Gates Industrial public by selling 38.5 million shares at $19 each, raising some $732 million. The IPO valued the manufacturer of power transmission belts and fluid power products at roughly $5.5 billion. But in the past year, the company's market cap has dropped to around $4.3 billion, with the stock closing Wednesday trading around $14.72 per share.
Stephen Schwarzman's buyout shop had slightly better fortunes a year earlier, when it took REIT Invitation Homes public, bringing in $1.54 billion by selling 77 million shares at $20 a pop. The offering gave the country's largest single-family house landlord a market cap of more than $6 billion. And in just two years, that total has ballooned to some $10.4 billion after it merged with fellow rental landlord Starwood Waypoint Homes. But the business has also been criticized for substandard living conditions and aggressive fees at many of its locations throughout California.
How will Blackstone fare with Exeter?
A recent Fitch Ratings report predicted that subprime auto loans will weaken in 2019, thanks to a forecasted rise in interest rates and a consumer debt total that's already reached record levels ($13.5 trillion as of Sept. 30, 2018). So perhaps its make sense why Blackstone, which has already owned the business for eight years, would want to cash out sooner rather than later.