Debt collector Cabot acts with Haste to secure £1bn flotation

Britain's biggest debt collector has lined up the boss of Wonga to steer it through a London flotation expected to value it at £1bn.

Sky News has learnt that Andy Haste, the former RSA Insurance (LSE: RSA.L - news) chief executive, is to be unveiled as the new chairman of Cabot Credit Management.

City sources said on Wednesday that Mr Haste, who is also chairman of Wonga, will be named in an announcement expected to be made by Cabot about its intention to float on Friday morning.

The appointment of a heavyweight chairman has allowed Cabot's owners to press ahead with their plan to list the company.

Insiders said that Cabot's owners, the New York-listed speciality finance firm Encore Capital Group and private equity group JC Flowers, would seek to sell part of their stakes in the flotation.

The company is also expected to seek in the region of £150m in new capital from institutional investors, banking sources said.

Cabot's plan to go public comes against a backdrop of growing warnings about the indebtedness of British consumers, and reflects burgeoning opportunities for the business to grow its customer base.

Earlier this week, the head of the City watchdog, warned that many young people were being forced to borrow money to fund essential everyday expenditure.

Goldman Sachs (NYSE: GS-PB - news) , Jefferies and Morgan Stanley (Xetra: 885836 - news) are leading the listing of the debt collector, which owns brands such as Cabot Financial and Wescot.

Earlier this year, Cabot bought Orbit, which is focused on collecting outstanding debts from water companies' customers.

The intention to float will come weeks after it emerged that Peter Crook, the former boss of doorstep lender Provident Financial (Other OTC: FPLPF - news) , had stepped down as a director of Cabot because of the crisis at his former employer.

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

Cabot's shareholders have been buoyed by the performance of Arrow's shares, which have risen by more than 55% over the last 12 months.

Sky News first reported Cabot's float plan earlier this year.

Analysts have said 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 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.

Cabot's listing will be among the largest in London this year, and will follow a flurry of float announcements in recent weeks by companies such as Bakkavor, TMF and Contour Global.

Recent discussions with potential buyers of Cabot, including the buyout firm Apax Partners, are understood to have been abandoned.

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.

Lowell is said to be in talks about the acquisition of a portfolio of assets in Scandinavia.

Cabot declined to comment on Wednesday.