Barclays Private Equity backs management buy-out of Cabot Financial

Barclays Private Equity, the leading mid-market private equity house, has backed the £100 million management buy-out of Cabot Financial, a market leader in the UK’s fast growing debt purchase market. Cabot Financial acquires portfolios of defaulted consumer debt from a range of lenders such as HBOS and Barclaycard.  

Cabot Financial was established in 1998 as the UK’s first specialist debt purchaser. The company has seen rapid growth with profits of £8.6 million on a turnover of £34 million in 2003. The management team, which holds 20 per cent of the equity of the business, is led by Ken Maynard and Glen Crawford.  

The debt purchase market has become well established in the UK over recent years, seeing around £1.5 billion of debts sold during 2003. The market is expected to grow at almost 20 per cent per annum over the next five years. This is driven by spiralling levels of consumer debt, combined with the increasing sale of defaulted debt which enables lenders to focus on their core business activities.  

Owen Clarke of Barclays Private Equity comments: “Consumer debt balances have increased substantially over the last couple of years and we have no doubt that this will be a key driver in the growth of debt sale. The UK’s consumer indebtedness is still behind that of the US when measured as a proportion of personal disposable income. We are delighted to have invested in Cabot Financial, continuing to build our financial services portfolio.”

Clarke continues: “We have been hugely impressed by the professionalism and foresight with which Ken and Glen have grown the business. We are looking forward to contributing to Cabot Financial’s future success.”  

Ken Maynard, managing director of Cabot Financial comments: “Over the last few years debt sale has become a core part of the debt management strategy of most main UK lenders. We have established strong, long term relationships with the major UK lenders selling debt. We remove the time and money costs associated with managing the debt collection process, allowing them to concentrate on the core aspects of their business. The management buy-out has provided us with the perfect platform to develop these relationships and continue to provide a high level of service, while increasing our market dominance.”  

Glen Crawford, general counsel of Cabot Financial continues: “We are excited about the opportunity that the buy-out gives us to accelerate the growth of the business and create opportunities for our staff. With the financial backing of Barclays Private Equity, we intend to continue our successful growth strategy in the UK, as well as planned expansion into continental Europe.”  

Barclays Private Equity’s investment was led by Owen Clarke and Dominic Geer, who specialise in making investments in the Financial Services Sector. Vision Capital also invested at completion for a minority stake in the business. Management and Barclays Private Equity were advised by Lawrence Guthrie of Hawkpoint Partners, and the Financial Markets Team of Barclays Bank provided senior debt.