Barclays buys debt purchaser for £100m

Barclays Private Equity, the mid-market private equity firm, has completed the £100m management buyout of Cabot Financial, a specialist debt purchaser.

Cabot Financial, which buys portfolios of defaulted consumer debt from the likes of HBOS and Barclaycard, has been acquired by Barclays Private Equity for £100m (€146m; $184m). 

Cabot Financial was formed in 1998 as the UK’s first specialist debt purchaser and now has 800,000 consumer accounts with outstanding debt of more than £1.5 billion. The management team, led by Ken Maynard and Glen Crawford, own a 20 percent stake in the business that is valued by the acquisition at £20 million. 

As levels of consumer debt in the UK have spiralled in recent years, the debt purchase market has become well established with £1.5 billion of debts sold in 2003. The market is expected to grow by a further 20 percent per annum over the next five years.

“Consumer debt balances have increased substantially over the last couple of years and we have no doubt that this will be a key driver in the growth of debt sale,” said Owen Clarke of Barclays Private Equity. “The UK’s consumer indebtedness is still behind that of the US when measured as a proportion of personal disposable income.”

Vision Capital participated in the transaction for a minority stake in the business, while the financial markets team at Barclays provided senior debt. The management team and Barclays Private Equity were advised by Hawkpoint Partners.  

Barclays Private Equity was active in the financial services sector last year, leading the €235 million buyout of First Assist from Royal & Sun Alliance and selling Clydesdale Financial Services and Preferred Mortgages.                

Barclays Private Equity, which invests in mid-market buyouts in the UK and Europe, has backed 300 transactions, typically worth between €15 million and €400 million.