Close up of businessman hands making handshake - greeting, dealing, merger and acquisition concepts

Torontos’ Duo Bank of Canada is buying Montreal-based subprime lender Fairstone Financial Holdings Inc.

Fairstone, which was previously known as CitiFinancial Canada, was acquired by private equity firms J.C. Flowers & Co. LLC and Värde Partners Inc. from Citi in 2017.

The company lends directly to consumers and finances consumer credit and vehicle purchases through retailers and auto dealers. It has more than $3 billion in assets.

Duo Bank is privately owned by an investor group led by funds managed by affiliates of industry entrepreneur Stephen Smith and Centerbridge Partners, L.P. and Ontario Teachers’ Pension Plan.

“This transaction creates a strong and diversified Canada-based financial services entity that has robust finances, operational excellence and a history of delivering topline and earnings growth,” said Jane Rowe, executive managing director, equities at Teachers’.

The terms of the deal were not disclosed. The transaction is expected to close in the second quarter, subject to regulatory approval.