Arrow Global, a UK-based buyer of delinquent consumer debt from credit card companies and banks, is set to list on Britain's FTSE index on Tuesday, a sign the industry is growing as banks attempt to boost their balance sheets.
It's expected the listing will be valued at about £400m, or $628 million. Arrow owns and manages an estimated £8bn, roughly $12.5 billion, of delinquent consumer debt that it buys at discounted prices and then seeks to collect a higher return on investment. The Financial Times first reported this story.
The company's work largely involves using technology and data analytics to identify and track down debtors when their contact information has been lost by original lenders. Once it has the information it uses third-party collectors to pursue the debt.
In the UK, debt buying companies are benefiting from a strong market as banks are increasingly interested in shedding distressed debt that is jamming their balance sheets and taking away much-needed capital.
The largest UK debt purchasers include Cabot Credit Management, Lowell Group, Arrow Global, CapQuest, Marlin Financial Group, Link Financial and Max Recovery. In July, Encore Capital Group closed its $177 million acquisition of Janus Holdings Luxembourg S.a.r.l., the indirect holding company of Cabot Credit Management.
Arrow Global bought $2.5 billion of debt for $190 million in the first six months of the year. and collected $171 million during the period. It expects to use the proceeds from the listing to make further acquisitions, according to the Financial Times.
Arrow Global has been majority owned by a fund run by Royal Bank of Scotland since 2009. In the first six months of the year, the company's revenue increased more than 50% compared with the year-ago period.
In July, a report from Apex Insight described how the consumer collection and debt purchase market segments in the UK have fared during the economic downturn finding, among other things, that while outsourcing debts is well established in the private sector, the public sector is seen to be a key area of growth.
The full report: UK Consumer Debt Purchase and Debt Collection: Market Insight, which includes findings from interviews, profiles of the larger players as well as an assessment of trends and forecasts for future growth, is available for purchase at: apex-insight.com/consumer-credit.