First Round: Courtesy call

Here at PEI Towers, press releases trumpeting successful company exits at healthy multiples are a regular occurrence. Indeed, First Round often needs to be discerning when deciding which of them merit further investigation. Sometimes a gem falls into its lap, however.

When it first saw a release from Wermuth Asset Management (WAM), a German family office, declaring a 3.2x return on capital invested, and an IRR of 17 percent, it thought decent, but so far so ordinary. WAM’s Greater Europe Deep Value Fund SPV had exited National Recovery Service (NRS), a “technically advanced debt collection service provider based in Russia and Eastern Europe”.

According to the release, the firm has “successfully recovered over 10 billion roubles for its clients”, which include Russian and international financial service institutions.

Before First Round had even had a chance to amuse itself by wondering whether a Russian debt collector’s balaclava would match his “accessory of choice” when “incentivising” debtors to cough up the readies, it realised that NRS was not that sort of company, and that WAM had done that particular job for it anyway.

According to Marina Shestakova, WAM’s chief risk officer, the firm had misgivings before investing in NRS. “At the time of investment it was unclear how a modern, polite and call centre-based collection platform would succeed in Russia,” she says. So First Round isn’t the only one then.

But the use of modern technologies, such as “voice-monitoring software to ensure collectors sounded friendly”, along with staff being “constantly faced with a mirror image of themselves” to “ensure they look friendly at all times” proved a winner. Debtors were charmed into parting with their money after a cosy phone chat.

This was far from the outdated view of what Shestakova calls “Moscow debt collection”, which, in her words, “immediately invokes images of big guys with baseball bats visiting debtors”. Well, quite. Anyway, First Round must dash, someone seems to be knocking rather insistently on the door…