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Sub-Prime Car Finance Firm Eyes Sale Jackpot

Sub-Prime Car Finance Firm Eyes Sale Jackpot

The founder of one of Britain's fastest-growing private companies is driving towards a multimillion pound windfall from the sale of his vehicle financing business, which offers credit to less well-off motorists.

Sky News understands that The Car Finance Company, which is based in Portsmouth, is exploring a sale to a private equity firm as it pursues a rapid expansion plan.

Insiders said on Monday that the company was in talks about a sale to Pine Brook Partners, a New York-based investment firm, that would yield a jackpot valued in the tens of millions of pounds for Mark Smith, its founder and managing director.

The Car Finance Company has exploited strong demand for credit from motorists who struggle to obtain finance from mainstream providers.

It uses technology which involves a mobile device being fitted in cars; if customers' accounts fall into arrears, the device emits audible reminders, while if they decline the company's efforts to discuss their situation, the car is immobilised once it has stopped and the engine is turned off.

The company says it is impossible to immobilise the vehicle while it is in motion.

In a statement issued to Sky News, the company said: "The Car Finance Company is experiencing significant growth and strong demand from customers who want to borrow from a lender that treats customers fairly, with dignity and respect.

"This strong business performance has attracted interest from potential financial investors.

"While no deal has been finalised, the Board of The Car Finance Company is in confidential discussions with a preferred party."

The business has experienced stellar growth in sales and profits in recent years, and was named as the UK's second-fastest-growing private company by sales by The Sunday Times' recent annual Fast Track survey.

In its most recent accounts filed at Companies House, the Car Finance Company said it had increased funding lines from £62m to £150m during the course of 2013 to take advantage of the growth in its customer base.

"Today we service around 25,000 live customers across our loan book and are acquiring around 1700 new loans per month," it said in the accounts.

"We believe this makes us the largest and most ethical supplier of non-prime car finance in the UK by far."

It added that while it serviced less than 0.5% of the monthly car finance market and only in the secondhand sector, it planned "to loosen some of these constraints and become a more significant player".

Pine Brook Partners could not be reached for comment.