Britain’s biggest debt collector, Cabot Credit Management will purchase a smaller specialised debt buying firm from Duke Street, a private equity group. Cabot Credit Management, a debt collecting and servicing business controlled by Encore, the US debt recovery group, and JC Flowers, a buyout firm based out of New York, will takeover Marlin Financial for £295m.
This acquisition deal will allow Duke Street some relief as the UK buyout firm has struggled to profit in the aftermath of the financial crisis. Cabot Credit Management will look to continue to capitalise on the opportunity created in the past few years by lenders under pressure to restructure their balance sheet in the face of increasing regulatory pressure.
Cabot Credit Management was previously owned by European financial services specialist AnaCap Financial Partners, who sold the business in May 2013, having successfully transformed it from a small, servicing only platform to a combined servicing and purchasing business of significant scale.
Private equity fund managers have recently looked to evolve consumer debt collecting agents that have serviced bank debt collections into platforms that are capable of purchasing entire loan portfolios at extreme discounts. UK lending firms have been ridding themselves of non-performing consumer loans as well as defaulted credit card debts at an extremely fast rate, in fact, the fastest since the financial crisis hit the UK.
It will be interesting to see if these kinds of deals continue to increase in the UK, and what that looks like for private equity firms and large banks in the future.