Encore Capital has acquired a majority stake in Cabot Credit Management through a deal worth £128 million.
A US and UK M&A acquisition has seen Encore Capital buy up a controlling interest in Cabot Credit Management (CCM), two weeks after the same firm was sold by AnaCap Financial Partners.
US-based debt management and recovery company Encore Capital has taken up a 51.1 per cent stake and has the option the purchase the remaining portion of UK firm CCM during between four and six years after deal closing.
It is said that the deal will bring together two ‘market leaders’ in the hope that CCM will be able to access more capital – in turn leading to its purchasing of additional debt and expanding into other asset categories.
CCM acquires and manages consumer debt and has, to date, purchased assets of £7.7 billion and now collects some £20 million per month on portfolios it owns and on behalf of clients.
CCM was formed after the merger in April 2011 of two businesses, Apex Credit Management and Cabot Financial.
Earlier in May, AnaCap Financial Partners, a European financial services private equity firm, announced the sale of CCM to funds managed and advised by J.C. Flowers & Co.
New owner Encore Capital, which is headquartered in San Diego, is publicly traded on NASDAQ Global Select.
Neil Cycle, chief executive of Kent-based CCM, says, ‘We believe Encore is a great strategic fit for our company.
‘Their strong operating advantages will allow the investments we’ve made to be even more profitable, and we look forward to the opportunities we’ll have to learn from one another.’
The £128 million 51.1 per cent deal involves J.C. Flowers & Co which holds CCM within its funds. The Encore Capital and J.C. Flowers partnership will see CCM continue to operate as a stand-along entity with all of its current staff being retained.
Ken Vecchione, Encore Capital president and incoming CEO, ‘Encore has been looking for a strong partner in the UK for several years – one that is a leader, has as strong management team and has the ability to leverage our analytic capabilities and efficient operating platform.
‘We’ve found all of this in Cabot Credit Management.’