New York- and London-based investment firm TowerBrook Capital Partners has sold Capquest, a UK consumer credit business, to UK and European debt purchaser Arrow Global Group for a total consideration of £158 million, according to a statement.
TowerBrook did not disclose the size of its original investment, made in August 2011 from its third fund, or its return multiple. It also declined to comment beyond the official statement.
Arrow Global said the acquisition would create a leading European debt purchase and debt management business, with combined receivables under management of £15.4 billion.
“It adds a significant portfolio of assets at attractive returns, supports our broad range of origination sources and extends our reach into new asset classes,” Arrow Global CEO Tom Drury said of the acquisition in a company statement.
Capquest’s main focus is the purchase of non-performing and semi-performing unsecured consumer loans, usually made up of credit card and bank debt. The company also traces debtors and collects and services debts for third party customers, according to TowerBrook’s website.
In its statement, Arrow Global said its directors believed the acquisition was “financially attractive” and would support the further growth of the company’s earnings per share going forward. The firm said the acquisition would be fully financed through cash resources and debt, with committed bridge financing from Goldman Sachs.
A source close to the deal told Private Equity International that during its ownership of the business, TowerBrook focused on preparing for the upcoming regulatory changes within the sector, as well as in the company’s infrastructure. The source said Arrow Global was the company best positioned to take Capquest on to the next stage of its development.
Separately, TowerBrook has also appointed US mortgage industry veteran Tom Marano to its management advisory board. Marano, who joined his previous firm ResCap, a subsidiary of Ally Financial, in 2008, spent 25 years at Bear Stearns, where he eventually served as the global head of mortgage trading and origination.
The firm hopes to utilise Marano’s three decades of experience in finance and lending to explore and develop investment opportunities in the financial services sector, with a particular emphasis on the residential mortgage industry. These could include businesses in mortgage origination, mortgage servicing, technology, trading, capital markets, and investment management, TowerBrook said.
In February, TowerBrook closed its latest fund, its fourth, on its $3.5 billion hard cap, $500 million above its original target. With more than $8 billion under management, the firm primarily seeks control-oriented investments in large and middle-market companies.
Investors in London-listed Arrow welcomed the deal: its stock rose 11 pence on Wednesday to 262 pence per share, giving the firm a market cap of £457 million.