Target Information

NewDay is a leading provider of consumer finance solutions in the UK, recognized for its effective origination and servicing of credit products. As of June 30, 2025, NewDay reported a significant increase in profitability, with an underlying profit before tax rising by 30% to £107 million and gross receivables expanding by 21% to £5.2 billion. The company has also made strategic acquisitions, including the Argos Financial Services store card portfolio, enhancing its customer base and product offerings.

The transaction involves KKR acquiring NewDay's portfolio of consumer credit receivables while leaving its operational business intact. KKR is now positioned to support NewDay’s current and future offerings, providing a strategic partnership aimed at fostering innovation and growth within the consumer credit sector.

Industry Overview in the UK

The UK consumer credit market is characterized by robust growth and innovation, with an increasing shift towards digital embedded finance. The market has seen a rise in demand for flexible credit solutions, driven by evolving consumer behavior and technological advancements. Retail partners are increasingly seeking integrated financial solutions that align with their offerings, and companies like NewDay play a pivotal role in this transformation.

In recent years, the introduction of stricter regulations has prompted lenders to enhance their underwriting practices and focus on responsible lending. Furthermore, digital transformation has enabled the development of next-generation credit solutions that cater to a diverse range of customer needs—from traditional credit cards to innovative credit offerings tailored for e-commerce.

The competitive landscape features a mix of traditional banks and fintechs, with collaboration becoming vital for success. Established players like NewDay leverage their experience and customer base to forge key partnerships, while also integrating technology to streamline services and enhance customer experiences.

Overall, the UK consumer credit industry is on an upward trajectory, promising opportunities for growth, innovation, and the introduction of new financial products tailored to meet evolving consumer demand.

Rationale Behind the Deal

This transaction serves to strategically separate NewDay’s portfolio of credit receivables from its operational activities, paving the way for enhanced focus on each area. By partnering with KKR, NewDay aims to leverage KKR's expertise in asset-based finance to scale its operations and expand its market presence significantly. The multi-year forward flow agreement enables KKR to participate in the origination of new credit, ensuring a continuous supply of receivables and maintaining the servicing quality provided by the NewDay Operating Group.

This collaboration not only consolidates NewDay’s position in the market but also opens avenues for sustainable growth by coupling its operational strengths with KKR’s financial capabilities.

Information about the Investor

KKR is a leading global investment firm with a diverse portfolio spanning various sectors, including asset-based finance. The firm is well-versed in the intricacies of consumer credit and has a strong presence in the UK market. KKR’s strategy focuses on long-term investments that yield sustainable growth, and it seeks to partner with companies demonstrating solid performance and innovative approaches.

Through this strategic alliance, KKR aims to bolster NewDay’s efforts in delivering responsible credit solutions, benefitting from its established reputation while simultaneously supporting its innovation journey in the consumer credit landscape.

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This transaction represents a potentially sound investment opportunity for KKR, as it combines NewDay’s established market presence with KKR’s financial acumen. By separating the credit portfolio from operational functions, both parties position themselves for a more streamlined and focused growth strategy. The continuation of existing customer relationships and operational practices ensures stability during the transition.

The alignment between NewDay and KKR's strategies is noteworthy. KKR's experience in asset-based finance complements NewDay's innovative approach to consumer credit solutions and should enhance their capacity to serve a wider array of customers. This partnership could lead to the development of new products and services, further solidifying NewDay’s market position.

However, like any investment, this deal carries inherent risks, primarily associated with market competition and regulatory challenges. The effectiveness of this collaboration will depend on the execution of their strategic plans and responsiveness to market dynamics, which can range from shifts in consumer behavior to regulatory changes.

In conclusion, the transaction has the potential to be a significant positive leverage for both KKR and NewDay, provided that they navigate the market landscape effectively and capitalize on their combined strengths into the future.

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