News

Permira funds to back the merger of Lowell Group and GFKL to create a leading pan-European credit management business

London, 7 August 2015 – Permira, the international private equity firm, announced today that a company backed by the Permira funds has entered into an agreement to acquire Lowell Group from majority shareholder TDR Capital. Terms of the transaction were not disclosed. Lowell Group is a leading UK provider of credit management services specialising in credit management and data analytics. The Permira funds will merge Lowell Group with existing portfolio company GFKL, a leading provider of receivables management services in Germany, to create a leading pan-European credit management business. Ontario Teachers’ Pension Plan (Teachers’) and the management of Lowell Group will remain shareholders. The transaction, which is expected to close in the fourth quarter of 2015, is subject to certain regulatory approvals and customary closing conditions.

Combining both market-leaders will create one of the largest credit management businesses in Europe with unparalleled growth prospects and very complementary competencies in debt purchase and outsourced credit services. The combined group has over 15 million customers and a leading market position in the two largest European financial services markets, Germany and the UK. The Group’s new multi-national operating model mirrors that of the larger credit providers, including Santander, Vodafone and Barclaycard, presenting an opportunity to further strengthen existing strategic client relationships. The combination will enhance the service that the group can provide to its customers and will have tremendous client benefits.

The senior management teams will remain in place and James Cornell, CEO of Lowell Group, and Kamyar Niroumand, CEO of GFKL, will co-run the company and are excited about the numerous opportunities today’s merger represents. The Permira funds’ investment is a significant endorsement of both GFKL’s and Lowell Group’s track record, current strength and future growth prospects.

Further Information

Further information on today’s transaction will be available on www.lowellgroup.co.uk and www.gfkl.com in due course.

Welcoming the Permira funds’ investment, James Cornell, CEO of Lowell Group, said:

“We are delighted to have attracted backing from such a renowned global investor as the Permira funds. Furthermore, retaining investment from Teachers’ is a huge testament to our success to date and a strong endorsement to the potential of our future Group. Over the last four years under TDR ownership, Lowell has grown significantly to become one of the largest and most established debt purchasers in the UK, employing over 1,200 people. With this transaction, Lowell is embarking on its next phase of growth, both in the UK and to create a leading pan-European credit management business. We look forward to realising the many opportunities to share best practice and collectively grow a stronger combined Group with GFKL, a company we have held in high regard for some time.”

Kamyar Niroumand, CEO of GFKL, added:

“We are thrilled that our new partnership with the Permira funds is already bearing fruit. This combination is a win-win deal. GFKL will benefit from Lowell’s best in class debt recovery and data analytics capabilities, while Lowell will profit from our successful track-record in business process outsourcing. This is a perfect strategic fit driven by tremendous revenue and growth potential.”

Philip Muelder, UK head of Permira and Chairman of GFKL, commented:

“We are incredibly excited to be bringing together two best-in-class financial services businesses, thereby delivering on the consolidation strategy outlined at the funds’ acquisition of GFKL. Together they will form a powerful leading pan-European Group with strong growth opportunities. This latest acquisition and merger is another example of our commitment to back growing businesses in Europe and to capitalise on our deep industry knowledge and global network to create best-in-class leaders in the financial services sector.”

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Media Contacts:

Lowell

Carol Ord                                                                                     +44 (0)7814 430 330

carol.ord@lowellgroup.co.uk

 GFKL

Philipp Halstrick, Hering Schuppener Consulting                               +49 69 92 18 74 55

phalstrick@heringschuppener.com

Permira

Noémie de Andia, Head of Communications                                     +44 (0) 207 632 1159

noemie.deandia@permira.com 

Notes to Editors

About Lowell

Lowell Group, headquartered in Leeds, is a leading consumer credit management group. It comprises two distinct businesses, Lowell Financial and Fredrickson. Lowell Financial, based in Leeds, specialises in investing in defaulted consumer debt portfolios and their recovery, while Fredrickson, based in Surrey, is a multi-award winning Debt Collection Agency (DCA).

Lowell Financial invests in non-performing consumer debt from a wide range of major creditors, across various industries, including financial services, communications, home retail credit and utilities.  Established in 2004, Lowell Financial has acquired in excess of 17 million accounts and has nine million customers, which represents a significant proportion of the UK’s credit active population.  The company is committed to treating its customers fairly, offering realistic, affordable and sustainable payment plans tailored to their individual circumstances.

About GFKL

GFKL employs 950 people and manages a receivables portfolio of EUR 16.6 billion for clients from various industries, including banks, insurance companies, online retailers and telecommunications companies. The company is one of the very few service providers in the market that has a high-quality professional receivables management offering, servicing not only major corporations but also medium-sized companies. GFKL has a huge growth potential in Germany and worldwide. An increasing number of companies are outsourcing their receivables management today, particularly small and medium-sized businesses which often lack the resources to do it themselves. GFKL’s competency in receivables management comprises a wide portfolio and high quality standards. GFKL has repeatedly been awarded Standard & Poor’s best possible servicer rating “Strong, Outlook Stable”. The company is headquartered in Essen, Germany.

For further information visit www.gfkl.com

About Permira

Permira is a global investment firm that finds and backs successful businesses with ambition. Founded in 1985, the firm advises funds with a total committed capital of approximately €25 billion. The Permira funds make long-term investments in companies with the ambition of transforming their performance and driving sustainable growth. In the past 30 years, the Permira funds have made over 200 private equity investments in five key sectors: Consumer, Financial Services, Healthcare, Industrials and Technology. Permira employs over 200 people including 120 investment professionals in 14 offices across North America, Europe, the Middle East and Asia. The Permira funds have a strong track record of successfully investing in financial services companies. Current portfolio companies include Saga, Just Retirement, Tilney Bestinvest and GFKL. For further information visit:  www.permira.com

Lowell Group will announce its interim financial results for Q3 2015 (1 April 2015 – 30 June 2015) on Wednesday 26 August 2015.

The results will be available for download via Lowell’s investor website:

http://www.lowellgroup.co.uk/index.php/investors

 

Investor call – 14.00hrs BST (15.00hrs GMT).

Lowell Group’s CFO, Colin Storrar, is scheduled to hold an audio conference presentation on the company’s performance at 14.00hrs BST (15.00hrs GMT) on Wednesday 26 August 2015.

To access this audio conference, you will need to register in advance at:

http://emea.directeventreg.com/registration/95907057

You will then be allocated the conference call number, a participant user pin, conference pin and instructions on how to join the conference call. For security purposes please do not give out these details for others to use, all participants must register individually if they wish to join the call.

Leeds-based Lowell Financial, a leading provider of credit management services specialising in debt recovery, data analytics and customer insight, has been accredited with Investors in People (IIP) Gold for a second time. 

With over 900 team members, the Leeds-based company first achieved Gold status in 2012.  Lowell Financial, which is part of the Lowell Group, is just one of 1057 organisations nationwide with Gold Status and one of only 19 in West Yorkshire to have been reassessed and again awarded Investors in People Gold status.

The prestigious award recognises that Lowell Financial operates the highest standards of people management and development to support its team and to achieve its business goals.

To ensure its Gold status was confirmed for another three years, Lowell Financial demonstrated that its senior management is committed to team member communication, training, development, and engagement; and also provided compelling evidence that all team members are fully engaged in the vision, values and development of the business. All of which provide a gold-plated endorsement of Lowell’s position as a highly attractive employer that recognises and supports team members.

James Cornell, Lowell Group’s CEO commented: “This is a fantastic achievement and I’m delighted that we have kept our highly prized Gold status.  Our success is down to the commitment of our fantastic team who embody the Lowell vision by working tirelessly to deliver a first class service to our customers.”

Investors in People is the UK’s leading people management standard.  Launched by the Government in 1991, it exists as a business improvement tool designed to help all kinds of organisations develop performance through their people. Gold, silver and bronze awards were introduced in 2009.

Will Brown, Senior Assessor, Investor in People commented “I’ve assessed over 100 organisations over the past 20 years and Lowell Financial is amongst the most progressive when it comes to investing in people in order to provide a great service to customers for the mutual benefit of stakeholders.”

Since being launched, over 30,000 UK organisations have gained Investor in People accreditation, but less than three per cent of those have gone on to achieve the Gold standard.

To achieve Gold status, organisations must meet a minimum of 165 evidence requirements compared to 39 for the standard Investors in People award.

Lowell Group, a leading consumer credit management company, today announced that it has increased the committed accordion on its existing revolving credit facility (“RCF”) from £83 million to £215 million, the accordion being subject to balance sheet conditions in keeping with the growth ambitions of the company.  This new funding has been achieved with the support of the company’s existing lenders the Royal Bank of Scotland (RBS), Lloyds Bank and JPMorgan together with new funding attracted from HSBC and DNB Bank ASA (“DNB”).

The increase in funding is provided at a rate of LIBOR plus 350 bps and is the largest reported RCF within its market. The additional funding also extends the term of the agreement from March 30th 2018 to February 28th 2019.  All the other terms in the credit facility, aside from the revised margin and the term, remain the same as the original agreement terms.

Colin Storrar, Lowell Group’s CFO commented: “We value the continued support of our existing lending partners and are naturally delighted that we have attracted additional funding from our new supporters – HSBC and DNB.  The increase in our RCF is a strong endorsement of our current plans and our future ambitions. We now have an even greater opportunity to build on our successes and continue our strong track record of growth as we move forward.”

Lowell Group posts strong Q2 results highlighting continued growth, prudent leverage and strong visible liquidity

Lowell Group, a UK leader in consumer debt recovery services, today announces continued strong performance in the second quarter of its 2015 financial year (1 January 2015 to 31 March 2015).

Its interim financial results for the quarter maintain the Group’s track record for delivering consistent and sustainable growth, high returns and visible earnings.

Highlights

  • Collections of £55.9 million in the quarter, up 14% compared with Q2 2014.
  • Adjusted EBITDA of £34.8 million in the quarter, up 10% compared with Q2 2014.
  • 84 month estimated remaining collections (ERC) of £742.4 million, up 19% since 31 March, 2014.
  • 48% of ERC (£353.4 million) expected to be recovered as cash within 24 months
  • Cash asset return (adjusted EBITDA/average ERC) of 19.6%for 12 months to 31 March 2015.
  • £126.1 million of free cash flow before debt and tax servicing has been generated in the last twelve months to March 2015.
  • £31.2 million of diversified portfolio investments in the quarter (97% from repeat clients) and £119.0 million already achieved or committed for FY 15.
  • Customer account numbers since inception increased to 17.0m from 13.9m as at 31 March 2014, an increase of 22% over the last 12 months.
  • As at 31 March 2015, the aggregate face value of debt purchased since inception totalled £13.7 billion, a 14% increase from the same period in 2014.
  • Loan to value ratio (net debt/ERC) reduced from 57% at original bond issuance to 50% at 31 March 2015. (51% at 31 March 2014).
  • Net debt to adjusted EBITDA is at 2.8x cover at 31 March 2015 with fixed charge cover ratio at 3.5x cover at the same date.

Commenting on the results, Colin Storrar, CFO, said:

“We’ve achieved another quarter of strong financials. Compared to Q2 2014, our Q2 2015 collections were up 14% to £55.9 million and EBITDA was up 10% to £34.8 million. At the same time our balance sheet continues to grow – our 84 month estimated remaining collections (ERC) now stands at £742.4m, an increase of 19% or £117m from March 2014. In addition, we continue to see value beyond our 84 month accounting period with our 120 month ERC increasing by 18% (£128m) to £829m.

“This cash flow visibility means we are well placed to invest in further purchases to satisfy our investment appetite, while the number and volume of our forward flow agreements and the fact we purchase across financial services, home retail credit and telecommunications clearly helps us achieve our purchasing goals.

“Our business also continues to focus upon maintaining discipline in pricing new investments, harnessing the significant data asset and analytic capabilities that the business benefits from.

“Our application to the FCA for a full licence continues to gather pace, with formal submission on track by the end of August. Customer centricity will be central to our application, something recognised by Investors In Customers who recently awarded us with a 3 star assessment; the highest that is available.

“In summary, we continue to report strong financial performance, strong medium term growth prospects and the ongoing support and backing of two major investment houses in TDR Capital and Ontario Teachers’ Pension Plan.”