Asda: KKR and TDR commit £23m to credit card firm Jaja after warning
The private equity backers of Jaja Finance have contributed another £23m in equity funding after the Asda credit card firm warned on its ability to continue as a going concern, City PM can reveal.
A group of existing shareholders participated in the funding in October, Jaja said, and have also vowed to commit a further £20m, in signs the company’s earlier debt raising plans have been put on hold.
Jaja, which operates the Asda credit card, counts private equity firm KKR among its shareholders, as well as TDR Capital, which co-owns Asda with billionaire Mohsin Issa and US firm Walmart.
In accounts signed off in late September, the company said it had “substantially advanced” but not yet completed a debt refinancing via a new structure, creating uncertainty which “cast significant doubt on the group’s ability to continue as a going concern”.
It said it was “targeting” October to launch the a new debt structure, which would include raising bonds via a new public entity known as Falcon Master Issuer.
But by mid-November the company had yet to complete the debt raise, despite the fact that Falcon Master Issuer was registered as a company more than seven months earlier.
“For [the] avoidance of doubt, there has been no debt restructuring,” a Jaja spokesperson told City PM, adding: “The business has always had sufficient funding headroom.”
Lowering debt interest costs a ‘priority’
Jaja, which has around a third of a million credit card customers including a portfolio of Bank of Ireland and Post Office accounts, said the new funding commitments “reflect continued confidence in our strategic direction and long-term growth plans”.
Earlier this year the company’s parent, Ray Fintech, arranged a new £100m debt facility at an eye-watering 15 per cent interest rate.
The payment-in-kind loan instrument is a higher-risk facility which allows a company to defer cash interest payments falling due on its existing debt pile. The company also extended its senior debt facility to £570m.
Jaja’s current debts are managed by another company owned by a group called Pana Finance, which raises wholesale debt via the Guernsey-based International Stock Exchange.
In accounts filed with Companies House, Jaja more than doubled its impairment charges to £39.5m, a move it said was partly attributable to a change in its provision methodology to “better reflect” the likelihood of customers defaulting.
Jaja reported total income of £51m in 2024, a rise of 50 per cent on the previous year after it saw a jump in interest income, while total losses grew 8.5 per cent to £41.5m.
In a statement the FCA-regulated company said it “has a low tolerance for financial risk” and “no appetite to breach any regulatory capital threshold”, adding its “priorities include securing additional equity investment to support growth of the business and negotiating lower cost of funds on existing borrowing facilities.”
Note: A clarification has been made to this piece referring to Jaja’s debt reorganisation as “a debt refinancing via a new structure” rather than a “debt restructure.”