20 September 2016
Arrow Global Group PLC
Arrow Global expands European footprint with addition of specialist servicing contract and capabilities in the Netherlands
Arrow Global Group PLC ("Arrow Global" or the "Group"), a leading European purchaser and manager of debt portfolios confirms that, in line with its growth and diversification strategy, it has agreed terms to take ownership of an additional specialist servicing capability and enter into a five-year servicing agreement in the Netherlands. As part of the investment, it will also co-invest in a secured loan portfolio with a face value of circa €1.7 billion (circa 9,300 loans), with the Group taking responsibility for servicing of the entire loan book.
The transaction sees Arrow Global partner with an existing strategic fund partner, CarVal Investors, to acquire the platform and loan book which comes from the real estate financing activities of RNHB Hypotheekbank ("RNHB") - a division of FGH Bank N.V., a fully owned subsidiary of Rabobank.
Given the quality of the secured loan assets (the average loan-to-value being 66%), the investors will secure nonrecourse leveraged finance to part fund the deal. Arrow Global will acquire a minority interest for a total investment of €25 million.
The transaction also include the transfer of a circa 60-strong incumbent servicing team and its servicing platform to Arrow Global's wholly owned Netherlands subsidiary, Vesting Finance Servicing B.V. ("Vesting"). Vesting will act as master servicer and will be responsible for administration of the entire loan portfolio.
· Adds additional expertise, platform capabilities and five-year servicing revenues to the Group's wholly owned Netherlands servicing business, Vesting
· Portfolio assets are predominantly performing secured loans for primarily buy-to-let residential and mixed usage properties, with a smaller proportion of CRE assets typically being industrial, retail, leisure or office properties
· Consistent with its strategy of partnering with credit funds to co-invest and manage portfolios of receivables - joining an existing fund partner, CarVal lnvestors, to enter into these asset classes within the geography
· Arrow Global to invest a total of €25 million in the platform and underlying loan assets with a face value of circa €1.7 billion
· CarVal Investors intends to run the RNHB as a going concern, continuing to lend to new and existing customers. Arrow Global would benefit from any servicing this generates and also retains the option to participate in these future investments
The purchase represents an expansion of Arrow Global's footprint in the Netherlands market, following an initial investment in June 2014 and the acquisition of Vesting in May 2016. This is the Group's second mortgage deal in the Netherlands in the last twelve months.
This transaction underpins existing growth plans. In addition to supporting the Group's Return on Equity, the portfolio acquisition and its associated specialist servicing team is also expected to provide additional data assets that will further enhance the Group's existing strong position in the Netherlands market.
The transaction is subject to works council advice and the conclusion of financing documents together with the approval of the Dutch Central Bank.
Tom Drury, Group Chief Executive Officer of Arrow Global commented:
"We are delighted to announce this important transaction, which brings additional servicing capability and long-term servicing contracts to the Group and sees us partner with one of our existing strategic fund partners, CarVal Investors. In acquiring the incumbent servicing solution we add new expertise and data assets to our existing platform.
"We look forward to providing a great service to the customers and employees of RNHB and to supporting their growth in the future as they continue to deliver a leading service in the Netherlands market.
"Across the Group, via our Portuguese business, Whitestar, we already have significant secured loan capabilities and this deal allows us to replicate this expertise in an additional geography. This portfolio investment is incremental to the £29 million of the H2 pipeline that we announced were awarded on 31 August 2016. We remain on track to deliver overall full-year results in line with our expectations."
For further information:
Arrow Global +44 (0)161 242 5896
Instinctif Partners +44 (0)20 7457 2020
About Arrow Global
Arrow Global is one of Europe's largest and fastest growing providers of debt purchase and receivables management solutions. We purchase customer accounts from a range of businesses, including retail banks, credit card and telecommunications companies. As of 30 June 2016, we owned and managed portfolios with an aggregate face value at the time of purchase of £19.1 billion, including £15.3 billion of purchased loan portfolios.
About CarVal Investors
CarVal Investors is a leading global alternative investment manager and is focused on opportunistic and credit-intensive investments. Since 1987, Carval's experienced team has navigated through ever-changing credit market cycles, opportunistically investing $93 billion in 5,300 transactions across 76 countries. Today, CarVal Investors has approximately $10 billion in assets under management in both credit and real estate strategies.
Forward looking statements
This announcement contains statements that constitute forward-looking statements relating to the business, financial performance and results of the Group and the industry in which the Group operates. These statements may be identified by words such as "expectation", "belief", "estimate", "plan", "target", or "forecast" and similar expressions or the negative thereof; or by forward-looking nature of discussions of strategy, plans or intentions; or by their context. All statements regarding the future are subject to inherent risks and uncertainties and various factors could cause actual future results, performance or events to differ materially from those described or implied in these statements. Such forward-looking statements are based on numerous assumptions regarding the Group's present and future business strategies and the environment in which the Group will operate in the future. Further, certain forward looking statements are based upon assumptions of future events which may not prove to be accurate and neither Arrow nor any other person accepts any responsibility for the accuracy of the opinions expressed in this document or the underlying assumptions. The forward-looking statements in this document speak only as at the date of this announcement and Arrow assumes no obligation to update or provide any additional information in relation to such forward-looking statements.
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