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Debt collection giant Cabot eyes lucrative stock market listing

The owners of Britain's biggest debt collector are beginning preparations for a bumper stock market listing expected to value it at more than £1bn.

Sky News has learnt that shareholders in Cabot Credit Management, which operates brands including Cabot Financial and Apex (Shenzhen: 002180.SZ - news) , have approached investment banks about an initial public offering expected to take place later this year.

If successfully completed, a listing would make Cabot the latest debt collection group to go public, following the listing of Arrow Global (Frankfurt: A1W6R9 - news) in 2013.

Cabot is majority-owned by Encore Capital Group, a speciality finance company which is listed on New York's Nasdaq (Frankfurt: 813516 - news) stock exchange.

The remaining shares are held by Cabot's management and JC Flowers, the private equity group whose UK investments include a stake in OneSavings Bank (Stuttgart: 2OS.SG - news) .

Analysts say that valuing Cabot precisely is challenging based on information filed at Companies House, although public disclosures show that earnings before interest, tax, depreciation and amortisation in the nine months ending September 2016 rose 24% to £180m.

In the debt portfolios it manages, the company estimates £2.1bn of remaining collections over the next decade.

Cabot, which also owns the debt collection agency DLC and Mortimer Clarke Solicitors, has built its UK business by acquiring assets from banks which have been seeking to meet increasingly onerous regulatory capital targets.

The company also operates in markets such as Ireland (Other OTC: IRLD - news) and Spain.

It says it has invested close to £2bn in buying portfolios with a face value of more than £20bn, and manages roughly £1bn on behalf of clients.

If it does pursue a London listing, Cabot is likely to be among the largest companies to do so this year amid a relative dearth of new flotations.

Its shareholders are said to have been buoyed by the performance of Arrow's shares, which have risen by more than 40% over the last 12 months.

Last year, Cabot was the first credit management service provider to secure full authorisation from the City regulator following a change in the supervisory regime.

Its other competitors include Lowell GFKL Group, which is backed by the private equity firm Permira and the Ontario Teachers' Pension Plan.

Cabot's board members include Peter Crook, the chief executive of Provident Financial (Other OTC: FPLPF - news) , the listed consumer finance business.

Cabot could not be reached for comment on Wednesday.