iA Financial Group invests in AutoCanada F&I online business; dealer group takes minority stake in used digital unit | Automotive Remarketing Canada Automotive Remarketing

iA Financial Group has invested $25 million in AutoCanada’s new F&I online business in the Kijiji market.

The investment gives iA Financial Group a 10% stake in the business unit, which will sell finance, insurance and warranty products to buyers of vehicles sold to private owners on Kijiji.

AutoCanada first announced its integration with Kijiji as early as March 2023, and the press release issued this time highlights the integration of consumer solutions developed by AutoCanada’s second-hand digital business on Kijiji.

The partnership between AutoCanada and iA is not new. Since 2018, iA has been the exclusive provider of insurance and warranty products to AutoCanada new car dealers.

This marks an update to the arrangement, which has now been expanded to cover AutoCanada’s used car dealers as well as its online consumer-to-consumer F&I business on Kijiji.

In addition, AutoCanada also announced the purchase of a 19.1% minority stake in its used digital division from dealer group executive chairman Paul Antony and other investors for $23.9 million in cash.

AutoCanada said in a news release that the measures will be funded by an investment from iA and $7.5 million in share units that can be issued to Antony. Previously used digital unit minority shareholders will use after-tax cash proceeds to purchase AutoCanada shares in the market.

Stephen Green, lead independent director of AutoCanada, said: “This transaction increases the company’s ownership in the used digital division while eliminating any conflicts that may exist with other business units and aligns management with the pre-owned digital Kijiji online business ahead of significant growth. Shareholders remain aligned.”, said in a press release. “The Board looks forward to working with Mr. Anthony and the rest of the AutoCanada team to advance the pre-owned digital business, which we believe has significant potential.”

As early as March 2023, it obtained the right to place an online consumer-to-consumer F&I business solution and an “instant cash offer” used car acquisition solution on the Kijiji Market.

After this step is completed, the dealer group begins to establish the operational foundation for the online C2C F&I business, including discussions with iA on the supply of insurance and warranty products for this new initiative.

These discussions concluded with a proposal for which iA has now received direct investment.

AutoCanada plans to strengthen and grow the program with online seller Kijiji.ca, the release said.

The Online F&I program will operate solutions hosted on the Kijiji online marketplace, targeting buyers of privately owned vehicles listed on the marketplace.

iA will become the insurance and warranty product provider for the Kijiji program and has invested $25 million to purchase a common equity interest in AutoCanada UDLP’s newly formed subsidiary, which owns and operates an online C2C F&I business.

AutoCanada explained in a press release that UDLP was formed in 2020 to own and operate AutoCanada’s non-OEM used vehicle business (subject to certain exceptions) and to facilitate the issuance of UDLP equity incentives.

Currently, UDLP’s business includes used car distribution, used car auctions and online “instant cash quotation” used car acquisition solutions, as well as online C2C F&I business with Kijiji.

When the dealer group learned of iA’s interest in a direct cash investment in the online C2C F&I business, Antony discussed the possibility of the company using the proceeds to facilitate a minority merger with UDLP.