Encore purchases remaining interest in Cabot

Encore will purchase the remaining interest in Cabot held by existing shareholders, including JC Flowers & Co, for five million shares of Encore common stock and £175.5m.

In 2013, Encore made an initial investment in Cabot, acquiring 43 percent of the business. It said its decision to acquire the remaining interest “reflects Cabot’s strong performance” since. Subject to regulatory approvals and other customary closing conditions, the transaction is expected to close within 90 days.

Cabot deployed £321.5m in new portfolio purchases in 2017. In the three months to March 2018, EBITDA was £79.6m, up 18 percent on the same period last year, when it posted £67.4m.

Its estimated remaining collections over 120 months was £2.4bn in March 2018, up from £2.1bn in March 2017.

Its servicing revenue in the three months to March 2018 was £19.8m, up 200 percent on £6.6m in the three months with March 2017.

Ken Stannard, chief executive of Cabot Credit Management, said: “This growth was underpinned by continued discipline in capital deployment, with an additional £50m deployed in the past quarter helping raise our 120 month ERC by 11 percent to £2.4bn compared to Q1 2017.

“The strength and quality of our back book has also been evident across the quarter, with 73 percent of payments coming from our, on average, 848,000 regular payers and customer breakage in repayment plans continues to remain low.”

On Encore’s purchase of Cabot, Stannard added: “In particular, becoming part of a large listed entity will provide us access to the capital we need to continue growing the business in a rapidly consolidating sector.

“Encore has already been such an integral part of our company that little will change on a day-to-day basis, other than being able to benefit even more from their scale, experience and financial strength.”