Baker, Ahles & Kaskovich

Fort Worth’s Elevate Credit expected to go public this week

Elevate Credit, an online lender to subprime customers, is based in Fort Worth.
Elevate Credit, an online lender to subprime customers, is based in Fort Worth. Elevate Credit

Elevate Credit, a Fort Worth-based online lender that offers short-term loans to financially-strapped consumers, is making another pitch to Wall Street.

The company, which put off an initial public offering a year ago when the stock market turned down, hopes to sell 7.7 million shares for $12 to $14 a share as soon as this week and raise more than $100 million. Proceeds would be used to pay down debt.

Executives spent last week at road shows touting the offering to potential investors. While no IPO date has yet been set, the offering is expected to be priced this week.

Elevate is one of a new breed of so-called “fintech” companies, which are using new technologies such data analytics to develop new financial service products.

Its installment loans and lines of credit, with brand names such as Rise and Elastic, are aimed at so-called non-prime consumers who either have low credit scores or no credit history. Elevate calls this market the “New Middle Class,” a huge market that has grown as wages have stagnated and traditional lenders tightened up after the last financial crisis.

Elevate CEO Ken Rees says non-prime consumers — mostly working-class Americans who live paycheck to paycheck with little savings — now outnumber traditional prime customers with strong credit scores, numbering as many as 170 million in the U.S. and the United Kingdom. But these customers can only access high-cost and often predatory products such as payday loans and title loans.

“Our customer is typically deeply frustrated with traditional banks, which have ignored their need for access to credit, fair pricing, and a path to lower rates and better credit,” Rees says in a letter with the prospectus, filed with the Securities and Exchange Commission. “Even though non-prime consumers now outnumber prime consumers in the U.S., most fintech investments and innovation have largely focused on providing credit to prime consumers who are already swimming in it.”

Interest rates on Elevate product can start as high as 180 percent (about half the rate of a payday loan), but can decrease to as low as 36 percent as customers make regular payments.

Elevate says it has been growing rapidly, with revenue reaching $580.4 million in 2016, up from $434 million in 2015, and expected to reach $675 million this year. The company is still losing money, recording a net loss of $22.4 million last year, but its operating income reached $47.8 million last year.

Elevate, which spun out of Think Finance, is based in southwest Fort Worth and has about 500 employees. It plans to trade on the New York Stock Exchange under the ticker symbol ELVT.

F-35 getting new Pentagon boss

A familiar face at the Pentagon who has overseen the F-35 program for the military for several years is retiring, meaning that Lockheed Martin will have a new chief to deal with in Washington.

Last week, Secretary of Defense James Mattis announced that Navy Rear Adm. Mathias Winter has been nominated to become vice admiral and program director for the F-35 Joint Strike Fighter, to replace Lt. Gen. Chris Bogdan.

Bogdan has been a strong supporter of the F-35 program, but also administered tough love, overseeing a restructuring designed to drive down the cost of the nation’s most expensive weapons program.

That goal has only become more important since the election, with President Donald Trump applying pressure through tweets to drive down the cost of the aircraft.

According to Defense News, Winter came to the F-35 office last year and serves as Bogdan’s deputy program executive director. He previously served as chief of Naval Research and earlier spent time in the F-35 office as as executive assistant and chief engineer.

Bogdan, who has made many trips to Fort Worth to meet with Lockheed executives and attend rollout ceremonies, has been the F-35 program chief since 2012. Early on, he described the relationship between the Pentagon and Lockheed as “the worst I’ve ever seen.” But following management changes in Fort Worth, he has complemented the company on making progress and has overseen the plane achieving initial operating capability status with both the Marines and the Air Force.

Lockheed is entering a critical time in the program as it ramps up production of the F-35. The company built 50 F-35s in west Fort Worth last year and expects to build 160 a year by 2019.

Andrea Ahles: 817-390-7631, @Sky_Talk

Max B. Baker: 817-390-7714, @MaxbakerBB

Steve Kaskovich: 817-390-7773, @stevekasko

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