The sale process, described by a source as a “full blown auction”, attracted both trade and private equity buyers with the emphasis on private equity. “These are more private equity style assets and the final round of the auction had a definite private equity flavour to it,” said the source.
Leeds-based Lowell posted a turnover of £50m in 2007. It specialises in purchasing consumer debts from blue-chip organisations and then managing the recovery of those debts.
A senior debt facility of £100m comprising a three-year term loan was provided by a syndicate led by
“It is important in the current market to know where to find debt because there is debt there,” said one insider on the assorted group of lenders.
Private equity has had a healthy appetite for debt purchase and collection businesses in recent years. Worsening consumer credit means more business for these companies. However, it is still a moot point whether increasing bad debt and a potential economic downturn make these assets more attractive.
“The reality of the debt purchasing businesses is that the model is new and has never been tested through a recession before. They might be more busy, but there could also be more delinquent debt,” noted the source.
Buyout groups generally tend already to have a stranglehold on the debt collection sector, with deals in the space often second-generation buyouts. Nikko Principal Investments, for example, acquired UK debt purchaser Cabot Financial Holdings Ltd for £275m in April 2006 from Barclays Private Equity. In October 2006, Advent International invested in Polish debt collection business ULTIMO in a secondary buyout from AIG Capital Partners.
Exponent, set up by former 3i executives in 2004, was investing from its £805m second fund closed in January this year. As part of the Lowell deal, Exponent appointed Adrian Hill, former chief executive of HFC Bank and general manager direct businesses at HSBC, as Lowell’s non-executive chairman.