UK ARM Giant Cabot Sold in Private Equity Deal

AnaCap Financial Partners LLP, a specialist European financial services private equity firm, announced Wednesday the sale of Cabot Credit Management (CCM) to funds managed and advised by J.C. Flowers & Co. LLC. The transaction agreements have been signed, and the transaction is expected to complete imminently.

CCM was formed after the merger in April 2011 of two businesses, Apex Credit Management and Cabot Financial, purchased by funds advised by AnaCap and its co-investors, Morgan Stanley Alternative Investment Partners and Partners Group.

Following the integration of the two businesses, backed by AnaCap’s intensive operational engagement, CCM has become a market leading acquirer and manager of consumer debt with over £7.7 billion of assets under management covering more than 3.5 million customer accounts. With the support of AnaCap, CCM built a business based on creating long-term, sustainable value through effective partnerships, founded on treating customers responsibly and fairly, and working with them to find practical and sustainable payment solutions to help individuals reduce their debt burden.

With the benefit of AnaCap’s intensive, operationally focused investment approach CCM demonstrated consistently strong financial performance. Over the past year, CCM’s results showed a 13% revenues increase driving adjusted EBITDA to £111 million, a YOY increase of 23%. In the 12 months to 31 December 2012 the group spent £99 million on new portfolio purchases, and expects to exceed that in 2013. In September 2012 CCM issued a £265 million Senior Secured Note thereby securing longer term funding for its business activities.

Joe Giannamore, Co-Managing Partner at AnaCap, commented, “We are delighted with the result for our investors following the sale of Cabot Credit Management. As a result of the commitment and hard work of many people in AnaCap and Cabot, the business is now thriving as the top debt management firm in the UK. We expect Cabot to see continued growth in the coming years and believe J.C. Flowers is the ideal partner to help Cabot reach the next stage of its development.”

Ed Green, Director at AnaCap, said, “This has been a highly successful growth story starting with the acquisition of a debt collection agency that was transformed into the leading dual debt purchase and contingency platform, offering service and capacity on a scale not previously achieved in the UK market. Following the acquisition of Cabot we led a successful integration programme to create a single integrated platform with a collective ethos at its core, founded on the concept of treating borrowers responsibly and fairly.”

Neil Clyne, CEO, Cabot Credit Management, commented, ““The Cabot Credit Management group has grown rapidly following the merger of Cabot Financial and Apex Credit Management. The purchase of the group by JC Flowers, who have a great deal of experience in the debt purchase industry, represents a very exciting next step in the development of the group. I’d like to take the opportunity to thank AnaCap for its support and the key role it has played in the development of the group.”

Financial Advisors to the deal were Citi and William Blair with CMS as legal advisor.