An investor group led by private equity firm Warburg Pincus LLC is purchasing ECN Capital Corp., the financing company

Steve Hudson

ran after a spinoff nearly a decade ago from what is now

Element Fleet Management Corp.

The all-cash $3.10 per common share purchase price represents a 13 per cent premium to ECN’s closing price Wednesday, and values the company at an enterprise value of approximately $1.9 billion, according to a news release issued Thursday.

The transaction is expected to close in the first half of 2026, subject to court approval and other conditions.

ECN said the transaction made sense for a number of reasons, including favourable terms with minimal closing conditions and noted that trading volume has been significantly lower since two units were sold, one to Truist Bank in 2021 and the other to Stone Point Capital LLC in 2022.

Hudson, who is 67 and owns seven per cent of ECN, said it was a good time to sell the remaining financing businesses because they’ve grown to a size where they will benefit from the backing of large financial players like Warburg.

“Once they get to a certain size, they really should become part of a bank or part of an insurance company or part of a massive private equity fund like Warburg,” he said. “They have far more financial resources to finance the growth.”

Hudson said he never repeated the mistake he made with Newcourt Credit Group in the 1990s, when long-term loans were funded using short-term commercial paper and the business was not scalable. After a meteoric rise and public offering, Newcourt’s fortunes tumbled in 1999, along with the purchase price paid by suitor New Jersey-based CIT Group Inc.

His strategy under ECN differed, he said, pointing to the sale of ECN’s service finance business to Truist Bank for cash proceeds of US$2 billion. That business had been purchased by ECN for US$309 million in 2017.

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“Truist was the eighth-largest bank in the U.S., so they had a big deposit base, capital markets, they could do securitization. They could do a number of things … to finance the business, far broader access to capital than we had,” Hudson said. “They paid us 20 times earnings for it, so we sold it for seven times what we what we paid for it. So I’m pretty happy (about) the track record from myself and my partners.”

ECN’s two remaining operating segments were manufactured housing finance and recreational vehicle and marine finance. It had managed assets of US$7.6 billion.

According to the news release, ECN has provided shareholder returns of more than 200 per cent since the spinoff in 2016.

“This transaction creates a liquidity event and provides a further return of capital opportunity for our shareholders,” the release said.

• Email: bshecter@nationalpost.com