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Barclays Private Equity sells Cabot Financial Holdings Group in £275 million secondary buy-out

10 Apr 2006

Nikko to help fund Cabot Financial’s expansion into Continental Europe  
Nikko Principal Investments Limited ("NPIL"), the European principal finance arm of Nikko Cordial Corporation, announces that it has acquired the leading debt purchasing business in the UK, Cabot Financial Holdings Group (“Cabot”), in a £275 million transaction.  

NPIL acquired Cabot from Barclays Private Equity (“BPE”), the pan-European mid-market private equity house. The deal was led by Simon Oakland and Peter Gissel, Principals of NPIL, who will become directors of the company. Ken Maynard, Chief Executive, Glen Crawford, Managing Director and other senior management will be reinvesting and importantly continuing in the business. Barclays Private Equity has also re-invested funds of £25 million, alongside NPIL, with the mutual aim of supporting the continued development of Cabot in the UK and Europe.  

NPIL successfully acquired the business following an accelerated auction process, conducted by Lexicon Partners, in which NPIL offered a complete funding solution, delivering its bid ahead of the original and revised bid deadlines.  

Cabot was established in 1998 and buys charged off debts from banks and other major lending companies including credit cards, loans, store finance, current accounts, mortgages and most other forms of available credit. The Company employs over 300 staff across the UK and currently owns 1.3 million customer accounts. Cabot has a 15 per cent share of the UK debt purchase market and in 2005 revenue was £55 million.  

NPIL and the senior management of Cabot intend to build on the successful growth of the business to date by supporting the Company’s expansion into Continental European markets.  

Barclays Private Equity originally backed the business in January 2004, taking a majority stake, and at today’s sale price has generated a 3x return on investment. The BPE transaction team was led by Owen Clarke and Dominic Geer. Vision Capital also took a stake in the original buy-out which they have sold in full.  

NPIL has a successful track record in the consumer finance and financial assets markets, including previous investments such as Mortgages plc, Resolution Life and its current investments in UK student loans and British Credit Trust, which NPIL recently helped to extend its funding lines to over £225 million.  

Brian Berry, Chief Executive of NPIL commented:  

“Cabot Financial represents a very significant opportunity for Nikko to build on the UK market leader’s position in the fast growing consumer debt purchase market and expand into other high growth markets overseas. With Nikko’s financial resources and financing expertise, combined with the high quality Cabot business and management team, we believe we have acquired an excellent platform from which to achieve this. We look forward to working with the Cabot management team to build on the pre-eminent business platform that has been established.”  

Ken Maynard, Chief Executive Officer of Cabot, added: 

 “We are delighted to be able to work with Nikko to take the business on to the next level. Nikko has an excellent reputation for supporting its investment companies and helping them fulfil their potential both here in the UK and overseas. The UK debt market continues to grow and we believe that there are significant opportunities for us to expand into new markets. We look forward to working with the Nikko team to achieve this.”  

Owen Clarke, Managing Director of Barclays Private Equity, added:  

“Cabot Financial has performed exceedingly strongly during our investment. Debt purchase is an increasingly competitive market but it continues to grow strongly. Cabot is the longest established business in the sector and has the most extensive database of acquired debt. An exceptional management team has kept the business at the forefront of market developments and we are therefore pleased to be re-investing in the company alongside Nikko and look forward to continuing our relationship with the management team.”

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