Arra Finance has finalized its acquisition of Crescent Auto Finance, New Orleans-based Crescent Bank's auto financing division. The deal helps pave the way for Arra to enter the auto securitization issuance market eventually.
The company also secured access to a credit warehouse facility with Goldman Sachs, worth over $100 million, providing readily accessible senior warehouse financing.
Arra, which provides subprime auto financing to franchise and independent dealerships across the U.S., is working with Obra Capital, an asset management firm, to lay the groundwork for an upcoming auto loan securitization program.
Arra is the rebranded name for Solera Auto Finance, previously owned by Solera Corp. In August 2024, Obra partnered with Solera Auto Finance's management in a buyout from parent Solera Corp. Arra is now majority-owned by Obra, whose loan financing will be junior to Goldman Sachs' financing.
"In preparation for our entry into the ABS market, we have enhanced our platform's scalability, improving our ability to meet dealer needs with diversified, reliable capital sources," according to a statement from Arra CFO Steven Lackowski.
An outcome of the deal is that Irving, Texas-based Arra has become the servicer for Crescent Bank's $770 million originated auto loan portfolio. Arra has also acquired Crescent's 180-strong auto finance team, and integrated Crescent's e-contracting, internal loan servicing, and accelerated auto-decision capabilities to its technology platform, the company announced.
The deal will enhance Arra's technology stack and analytics capacity, quadrupling its auto finance origination capacity and reducing credit application response times to "a matter of seconds," Arra said in a news release.
According to Arra's CEO Kenn Wardle, the company's technology offers 100% automated decision making, with word being sent to dealerships in under six seconds.
"The technology platform we bought from Crescent gives us visibility into different credit data attributes that we get from outside vendors such as credit bureaus and other third-party data sources," said Wardle. "Our loan management program keeps track of the attributes of collateral vehicles and borrowers, with each contract being tied to a unique consumer and a unique VIN (vehicle identification number)."
Arra has conservative lending policies. "We target borrowers in the 520 to 700 FICO score range, Wardle noted. "We don't lend to consumers who only have an ITIN (Individual Taxpayer Identification Number)."
The partnership with Arra will enable Obra to "work with securitization market participants and forward flow purchasers to create highly rated assets," Blair Wallace, Obra's president and CEO, said in a statement at the time of Obra's acquisition of Arra.
While Obra onboarded Solera Auto Finance's management team, infrastructure and dealer network, the transaction didn't include a large loan book, Matt Roesler, Obra's managing director of structured credit, said in a statement on Arra's website. Crescent has originated over $5.3 billion in auto loans nationwide over its 30-year history.
Arra has put in place funding capital sources which will scale up with its business growth. With Obra's support, it has entered a multi-year forward flow agreement to provide a supporting capital base. A forward flow agreement is a contractual arrangement according to which one party commits to buying specific assets such as receivables or loans from another party on a continuous and recurring basis over a fixed period.
