Philip Muelder and Chris Pell talk about Permira V's latest Financial Services investment: Lowell. The business will be merged with existing portfolio company GFKL, a leading provider of receivables management services in Germany, acquired in May 2015.
1. What does Lowell do?
Lowell is a leading UK provider of credit management services specialising in credit management and data analytics. It has over 17 million accounts and 9 million customers in the UK. The business has a c.20% market share in the UK receivables management market, which is the largest non-performing loan (“NPL”) market in Europe. Lowell is a specialist in small balance NPLs, typically ranging between £500-£1,000. The company has deep relationships with a diversified blue-chip customer base across financial services, telecommunications and retail. The UK market is growing at c.10%, with above average growth in Lowell’s sub-segments.
2. How was the investment originated?
We have been monitoring the European receivables management sector for the last decade. It is an attractive sector with structural growth, resilient earnings and is now undergoing a period of consolidation. We have known and admired the Lowell business for many years and approached its management team to jointly explore strategic options for the group, including a combination with GFKL. Lowell Chairman Adrian Hill and Chief Executive James Cornell supported us during our due diligence of GFKL. After the signing of GFKL we decided to approach owner TDR with an offer to buy Lowell.
3. What will the combined business offer?
The combination of Lowell and GFKL creates one of the largest and best positioned credit management businesses in Europe and together with the management team we plan to expand this leadership position. With the backing of the Permira funds, the new Group is well positioned to capitalise on the strong growth opportunities by taking advantage of the complementary skill sets and their collective breadth and expertise. The Group will be jointly led by James Cornell, formerly CEO of Lowell Group, and Kamyar Niroumand, formerly CEO of GFKL. Together the company will create a ‘one stop shop’ able to provide extensive recoverables management services.
The Financial Services team was established in 2008 and is led by James Fraser. Current investments include: Tilney Bestinvest, a leading UK-based private client wealth manager, Just Retirement, a UK-based specialist provider of retirement income products and Saga, a leading provider of products and services to the over 50s in the UK.
