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PCL Funding II Plc (Series 2017-1): 19 June 2017

A standalone transaction, where the issuer’s primary source of funds to make payments on the Series 2017-1 Notes will be the payments it receives from the collections received in respect of a portfolio of advances made by Premium Credit Limited to fund insurance premia and other payment plan receivables which will be purchased by the Asset Trustee on an ongoing basis.

PCL began operations in 1988 as a division of HSBC’s insurance subsidiary, HSBC Gibbs. In 1996, Electra Partners, a private equity fund, led the management buy-out of PCL and, in 2004, PCL was sold to MBNA Europe Bank Limited. In 2006, following MBNA Europe Bank Limited’s merger with Bank of America, PCL became a Bank of America company. In 2012, MBNA Europe Bank Limited sold PCL to GTCR LLC, a Chicago based private equity firm. Since February 2015, PCL has been owned by Cinven, a leading international private equity firm.

PCL is one of the largest independent providers of insurance premium finance and other service fees loans. PCL provides loans to borrowers which they use to pay annual insurance premiums and service fees such as school, professional membership, sports and leisure fees. PCL has strong relationships with a diverse network of over 3,000 brokers, insurers and other intermediaries which introduce its products to end-customers. PCL’s income derives from a combination of interest income on the amounts they advance and fees receivable for the services provided. For the year ended 31 December 2016, PCL generated income of £132.8 million and operating profit before tax of £60.4 million.

The portfolio consists of 1,918,207 receivables, where the average principal balance is £536. Product type (by number of receivables & % balances): C&C 148,129 – 48.26%, PL&S 1,691,084 – 42.55%, DDMS 65,460 – 7.31% and SFP 13,534 – 1.88%. Customer type (by number of receivables & % balances): Corporate 151,456 – 51.19%, Retail 1,766,751 – 48.81%. Obligor concentration: Top 1 – 0.18%, Top 5 – 0.52%, Top 10 – 1.35%. Country concentration: UK – 97.84%, Ireland – 2.16%. The WA seasoning is 4.67 months.

Significant Investor: The Seller will, on the issue date, purchase 100% of the Series 2017-1 Class D Notes.

CRR 405: Premium Credit Limited (the Seller), as “originator” for the purposes of Article 405(1) of the CRR will, for the life of the transaction, retain a material net economic interest of not less than 5% in the securitisation in accordance with Article 405 of Regulation (EU) No. 575/2013. As at the Series 2017-1 Issue Date, such interest will take the form of a first loss tranche comprising of the Class D Notes, having a Principal Amount Outstanding of not less than 5% of the Allocated Aggregate Receivables Principal Balance.

Compare/contrast: Laser ABS 2017, Marketplace Originated Consumer Assets 2016-1, Towd Point Mortgage Funding 2016 - Granite 3 Plc