In morning trade on Monday, the Money3 Corporation Limited (ASX: MNY) share price is racing higher.
At the time of writing, the vehicle-focused consumer finance provider's shares are up 4$ to $2.85.
Why is the Money3 share price racing higher?
Investors have been buying the company's shares this morning after it announced a new acquisition and an update to its guidance for FY 2021.
According to the release, the company has entered into an agreement to acquire GMF Australia for $17 million. This will be funded from the company's cash reserves.
GMF Australia is a subsidiary of General Motors Financial Company and consists of a portfolio of approximately 700 automotive loans for new vehicles.
The transaction is expected to settle in February 2021 and increases the company's automotive loan book by approximately $23 million.
The release explains that GMF Australia will be absorbed by the company's Customer Care operation with a minimal increase in ongoing operational expenses.
Money3's Managing Director, Scott Baldwin, commented: "Money3 continues to leverage its strengths in collections with the acquisition of approximately 700 customers of prime credit quality that purchased a new vehicle through a Holden dealership. It demonstrates the group's ability to acquire customers either organically or through portfolio acquisitions."
"There are no staff or complicated transition processes needed for this acquisition as all outstanding commitments will roll into the existing Customer Care team deploying capital immediately with customer repayment patterns aligning nicely with the cash requirements of the business in 2021," he added.
FY 2021 guidance.
Pleasingly, the company's strong form continued through to the end of the first half. Combined with recent acquisitions, the company expects its full year result to be stronger than previously forecast.
As a result, management has upgraded its full year guidance for net profit after tax to $36 million. This compares to its previous profit after tax guidance of $34 million and will be a year on year increase of 12.2%.
