Our strategy

Clear strategic priorities

We believe we have the right strategy in place to drive growth and create value for our shareholders.

Arrow’s strategy is to continue to grow into its large and expanding market via an increasingly capital-light business model. The Group is therefore focusing on growing earnings and funds under management from its Fund and Investment Management and Asset Management and Servicing businesses. Progress in 2020 was encouraging, as Arrow deployed 28% of its first discretionary third-party fund, Arrow Credit Opportunities 1 and won 26 new servicing mandates. The Group’s five-year targets are firmly aligned to this strategy and good execution will result in a business with a significantly larger proportion of its earnings originating from recurring, capital-light sources, combined with lower leverage and net debt. This will generate significant value creation for our shareholders.

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Live and breathe our purpose and culture, supported by clear and ambitious ESG goals

Our approach

  • Enable customers to build better financial futures by helping them to rehabilitate their credit scores and gain access to future credit
  • Use industry-leading data and analytics to better understand our customers’ financial situations and tailor our interactions with them on an individual basis
  • Work with debt charities and other organisations that provide free impartial services to ensure that customers get the best possible advice
  • Clear ESG framework built

Progress in 2020

  • Finalist for 11 industry awards, winning seven
  • Maintained our strong relationship with Citizens Advice in the UK
  • Worked closely with and funded StepChange, Payplan and Christians Against Poverty on consumer debt issues
  • Customer engagement via digital routes continued to increase
  • New sustainability framework, which was approved by the board

Key priorities in 2021

  • Continue to focus on excellent customer outcomes
  • Increase customers’ digital interaction with us
  • Maintain staff incentives based on positive customer outcomes
  • Deliver against ESG targets

Allocate capital dynamically to drive outsize returns while effectively managing risk

Our approach

  • Make value accretive capital allocations depending on the prevailing market and economic environment
  • Strike a balance between investing for growth, increasing returns to shareholders and deleveraging
  • Ensure all investments are made on a prudent riskadjusted returns basis

Progress in 2020

  • Prioritised liquidity preservation in H1 due to COVID-19 pandemic economic uncertainty
  • Grew investment volume in H2 to take advantage of investment opportunities presented by the economic dislocation
  • Prioritised investments backed by hard, quality assets

Key priorities in 2021

  • Monitor the macro-economic environment
  • Deploy increased investment volume should returns increase
  • Continue to focus on high-quality secured assets

Prioritise investments in high-value, granular niche products in our core markets whilst creating opportunities for platform servicing revenue

Our approach

  • Leverage expertise in granular asset classes to target high-return niches
  • Use local knowledge and experience of our local incountry teams to drive performance
  • Maintain underwriting discipline 
  • Maintain diversity by geography and asset class
  • Invest in assets that provide returns significantly above our mid-teens IRR target
  • Provide quality asset servicing solutions for third-party clients
  • Deliver consistent asset serving results for our Fund and Investment Management business

Progress in 2020

  • Arrow invested through its SMA in the ACO 1, which as a whole invested at a rolling IRR of 17% in 2020
  • Created a diverse investment vintage by geography and asset class
  • 26 new third-party servicing contracts won
  • Arrow’s owned platforms are the primary servicer on 73% of ACO 1’s fund investments and are involved as a servicer on 88% of ACO 1 fund investments

Key priorities in 2021

  • Continue to invest prudently and at attractive returns across a diversified vintage
  • Drive internal and third-party collections performance

Build a scalable and sustainable fund management platform with a diverse spread of global investors

Our approach

  • Raise further funds at larger scale
  • Grow the number and diversity of limited partner investors in our funds
  • Grow FUM to over €10 billion by end 2025
  • Increase the Group’s proportion of higher quality capital-light earnings

Progress in 2020

  • Raised first discretionary third-party fund – ACO 1
  • FUM grew by €0.6 billion to €4.3 billion

Key priorities in 2021

  • Deploy ACO 1 fund at attractive returns
  • Maintain focus on offering our clients excellent service and solutions
  • Consider attractive new investment strategies for future fundraisings

Develop industry-leading asset management and servicing expertise which support our investment ambitions, clients and customers

Our approach

  • Retain current talent
  • Ensure we can offer attractive opportunities to new investment talent that can complement and expand on our current expertise
  • Deliver the highest quality of service to clients
  • Ensure we have the most up-to-date expertise to ensure that customer satisfaction and welfare are always successfully delivered

Progress in 2020

  • Continued to retain senior members of the investment team
  • Hired new talent with accretive expertise
  • Customer satisfaction levels increased despite the impact of COVID-19
  • Won the Credit Strategy award in relation to client service

Key priorities in 2021

  • Continue to prioritise retention of investment talent
  • Identify new talent that fits well with the Group’s strategy, purpose and culture
  • Continue to ensure that client and customer experience are best-in-class

Create a simple, efficient and flexible organisation by deploying agile practices, supported by strong leadership and a commitment to develop our people to reach their full potential

Our approach

  • Identify opportunities to increase productivity
  • Identify opportunities to reduce costs
  • Ensure maximum working flexibility for employees facilitated by leading technology solutions
  • Prioritise development of our employees

Progress in 2021

  • Embarked upon a £10 million cost reduction programme
  • Reduced costs by £8.9 million year on year
  • Enabled 100% of employees to work from home while also improving productivity scores

Key priorities in 2021

  • Continue to identify opportunities to reduce costs and improve productivity
  • Continue to ensure that employees are able to work with flexibility