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Innovating financing across an industry

Lowell Group

After acquiring Lowell, we worked with management to transform the way the industry was financed, expand the company’s business model and drive substantial growth.

Description

At the time of our ownership, Lowell Group (“Lowell”) was a UK market leader in the acquisition of portfolios of non-performing consumer debt from a blue-chip client base across financial institutions, telecommunication companies, home shopping retailers and utility companies.

Lowell’s strong performance track record resulted from its sophisticated data management technologies, which provided the business with significant analytical capabilities and a clearly differentiated competitive position in both portfolio acquisitions and collections.

Reputation and compliance are vital in this industry. Lowell’s recognised thought-leadership on compliance and careful customer management have been core to its operations, and have been a core focus for debt originators.

Transaction

We began researching the sub-prime financial services space in 2008 and narrowed our focus on the debt purchase sector during 2010. We were attracted by the industry’s high underlying return on capital, the strong market growth prospects and the opportunity to improve financing structures in the space.

We identified Lowell as one of the most attractive and resilient players in the market, and we subsequently completed the acquisition of Lowell from Exponent Private Equity in September 2011.

What we did

During the course of our research into the industry, we identified that there was a strong case for a more flexible financing structure for the debt purchase sector as a whole. We worked closely with management to reposition the business as it had very strong, but overlooked, credit characteristics resulting from its significant cash generation and asset backing.

As a result, in March 2012 Lowell issued a new high yield bond, and tapped this bond twice in 2013 and 2014 to support the strong growth of the business. As the first of its kind in Europe it was transformational for Lowell and its peers.

In parallel, management had driven a strategy of significant asset growth by expanding the business’ capabilities, both organically and through acquisition, and focusing on operational efficiency. This resulted in the business almost trebling in size under our ownership.

How we exited

In September 2014, we sold a substantial minority stake in Lowell to Teachers’ Private Capital, an investment division of the Ontario Teachers’ Pension Plan Board.

We sold our remaining shareholding in the business in October 2015 to funds managed by Permira.

Further information

Date of investment: September 2011
Deal type: Private sale
Exit date: October 2015
Exit route: Financial buyer
Status: Realised

Visit the company’s website at:  lowellgroup.co.uk