Santander Consumer USA
In 2011, Warburg Pincus, alongside two other financial sponsors, acquired a 25% stake in Santander Consumer USA, Inc. (SCUSA), the largest independent non-prime auto finance company in the U.S. The company’s scale, coupled with its industry leading analytics and disciplined approach to underwriting, allowed SCUSA to generate consistently attractive returns through cycles. Due to changing capital requirements in Europe and issues in the Spanish economy, Banco Santander sought to raise capital, and decided it would monetize a portion of its ownership in SCUSA. The distribution of value-added Financial Services products to the underserved lower-to-middle income consumer was a key investment theme for Warburg Pincus, and the non-prime auto finance sector was an attractive area for investment. Warburg Pincus developed a strong understanding of the sector and relationships with many key executives, including a close relationship with SCUSA’s CEO, which positioned Warburg Pincus well for this transaction. Over the course of the investment, Warburg Pincus assisted the SCUSA management team in evaluating a number of potential investment opportunities and joint ventures. Warburg Pincus worked closely with SCUSA to help structure a transformative, 10-year agreement with Chrysler Group LLC to originate private label loans and leases under the Chrysler Capital brand, giving SCUSA access to over 2,600 Chrysler dealerships as the auto manufacturer’s captive financing provider. In 2014, SCUSA successfully completed its IPO and Warburg Pincus fully exited its position in the company later that year.
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