McMorran said FSF's main desire was to see companies undertake responsible lending. "I don't doubt [the Warehouse] would already be doing that."
She said it wasn't unusual for retailers to have their own financial services products. Companies such as Smiths City and department store Smith and Caughey commonly had them.
Others, such as Farmers, outsourced their store cards to a third party to manage.
The Warehouse Group, through its retail brands, already offers a range of financial services products through a joint venture and various third-party arrangements. These include a low interest rate credit card offered with Westpac bank at its Warehouse stores and finance arrangements at Noel Leeming through GE Finance, SBS Bank-owned Finance Now and lease finance through EasyLease.
The group also offers travel, life and pet insurance through Sovereign and PetPlan.
Chief executive Mark Powell said it had kept all the parties informed of what it was doing and would gradually take over managing the products in-house over the next three to five years.
A key part of that management was the acquisition of Diners Club New Zealand for $3 million.
Powell said Diners would provide experienced people, core systems and the infrastructure to handle The Warehouse's move into financial services. He said the book value of its financial services business was currently about $400 million but it saw that growing to $600 million.
"We don't think that is overly ambitious."
A book of that size would add about 4 per cent to 6 per cent to earnings before interest, tax, depreciation and amortisation.
The financial services business is expected to lose up to $3 million after tax in financial year 2014 and 2015 but should make a positive contribution from 2016.
Powell said it could add between $25 million and $30 million to the company's bottom line in the medium to long term.
The company plans to launch new products as part of the move, including a scheme card, premium credit card, instalment product and insurances.
Powell would not specify exactly what products the company planned to launch, citing commercial sensitivity, but said they would be tailored to its different businesses.
The first products would be rolled out gradually from August, he said.
The capital raising to fund the new business venture would be by way of a $100 million institutional placement at $3.23 per share and a $15 million share purchase plan available to New Zealand resident shareholders.
The Warehouse Group founder Sir Stephen Tindall said both he and his Tindall Foundation would participate in the equity raising to maintain their level of ownership.
The group comprises 92 Warehouse stores, 76 Noel Leeming stores and 63 Warehouse Stationery stores in New Zealand and some online businesses.
Its shares closed flat yesterday on $3.61.
Finance Plan
• $115 million capital raising to set up financial services operation.
• $3 million purchase of Diners Club New Zealand.
• $400 million current book value of financial services business.
