Our strategy

Clear strategic priorities

We have adapted our business to respond to a more competitive market for purchasing non-performing and non-core assets. By focusing on high-value smaller transaction niches where higher-quality returns are available we have successfully diversified our income and driven higher-quality earnings through our capital-light AMS Business.

With the build-out of our unique platform now largely complete, we are in prime position in our chosen markets to deliver our strategic priorities over the next five years which are to focus on strong consistent returns in the Investment Business, to grow our capital-light Asset Management and Servicing Business, to be a leading player in our chosen markets, to transform the customer journey within or industry and to attract and retain the best talent.

Our strategy aims to build a sustainable and growing business that delivers attractive returns to shareholders. Whilst we do not have an ambition to be the largest, we do aim to be the best at what we do. Our two business lines are interdependent and together they will allow us to deploy capital intelligently and maximise returns through the cycle.

Expand all

Focus on strong consistent returns in the Investment Business

Our approach

  • Maintain investment discipline and target our mid-teens IRR target
  • Ensure that investments are well diversified by geography and asset class to increase risk-adjusted returns
  • Specialise in high value niches where Arrow’s specialist capabilities deliver sustainably high returns
  • Look to invest via bilateral trades and in off-market situations, which provide higher quality returns
  • Access larger deals by co-investing with partners, providing a combination of equity exposure and servicing fees for managing the assets
  • Significant diversification as a result of larger volumes of smaller deals

Progress in 2018

  • Organically invested £263.4 million in portfolio purchases across 40 deals
  • 78% of transactions in off-market transactions
  • Average Arrow investment contribution per deal of £6.7 million
  • £1.6 billion of third-party capital invested alongside Arrow’s equity
  • Ended the year with our 2018 vintage geographic split by investment of: UK: 20%, Ireland: 14%, Portugal: 17%, Netherlands: 18%, and Italy: 31%

Key priorities in 2019

  • Continue to invest in loan portfolios that meet our strict returns criteria of a mid-teens IRR
  • Continue to create balanced investment vintages by geography and asset class
  • Maintain investment volume growth in line with our target to grow faster capital-light earnings from our Asset Management and Servicing Business, but still grow volumes well above our replacement rate

To grow our specialist capital-light Asset Management and Servicing Business

Our approach

  • Ensure our servicing platforms provide value for us and our clients
  • We have built a high-quality servicing platform across our chosen geographies which provides unique access to deal flow and regulatory conduct parity with European banks
  • Meet the growing demand from clients as banks increasingly outsource their specialist servicing requirements and alternative investors seek asset exposure, not servicing platform acquisition
  • Continue to grow diversified and predictable cash flows by increasing the number of long-term servicing contracts
  • Outperform client core collections targets in order to capitalise on incentive fee structure
  • Capitalise on our scale benefits through operating leverage, local expertise and local relationships
  • Grow our discretionary fund management offering in response to sophisticated institutional investor client demand
  • Grow total AUM – creates ‘walled garden’ of assets from which our Investment Business can purchase tails of proven assets at attractive returns

Progress in 2018

  • Grew AUM 11.0% from £47.4 billion to £52.6 billion
  • Acquired relevant European servicers in order to complete the formation of our pan-European platform focused on our chosen markets
  • Announced ambitious target to double AMS income by 2023
  • Disposed of non-core Belgian platform

Key priorities in 2019

  • Grow AUM across all geographies
  • Continue to manage client assets accretively
  • Continue to grow AUM through managed accounts
  • Progress towards material fund raising ahead of the future launch of Arrow’s discretionary fund management offering

To be a leading player in our chosen markets

Our approach

  • We have carefully identified the markets we want to operate in; those with strong NPL volumes, high returns characteristics and established regulatory environments
  • We have focused on identifying and acquiring the best businesses with
    the best management teams in our chosen markets
  • This has allowed us to increasingly diversify our earnings by both geography and asset class. It has also enabled us to increase our Asset Management and Servicing income significantly
  • Operating over a wider geographical footprint has provided us with access to a greater range of investment opportunities and supported our ability to continue to source high-return opportunities
  • We are regulated in all of our jurisdictions and actively participate in industry bodies that help lead change in legislation and best practice
  • Our strong reputation and relationships make us a favoured buyer of portfolios, enabling us to engage in a greater number of off-market transactions

Progress in 2018

  • Acquisition of Parr Credit in Italy
  • Acquisition of Europa Investimenti in Italy
  • Acquisition of Norfin in Portugal
  • Organically purchased £263.4 million of portfolio investments and increased 84-month ERC by £117.9 million

Key priorities in 2019

  • Ensure the smooth integration of the most recent acquisitions into the Group
  • Continue to drive operational excellence throughout the business

To transform the customer journey within our industry

Our approach

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

Progress in 2018

  • Customer engagement via digital means continued to increase
  • We won three awards at the Credit Strategy awards
  • 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

Key priorities in 2019

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

To attract and retain the best talent

Our approach

  • We understand that to be the best in one’s industry it is vital to employ the best
  • We aim to employ talent from leading financial and technology companies and education institutions
  • We support all our employees through a focus on providing accessible training and career planning
  • We look to retain talent by providing a competitive package of pay and benefits, as well as valued incentives and recognition programmes, with a focus on rewarding behaviours that promote a culture orientated around customer satisfaction
  • We have an ongoing commitment to build the strength of the leadership, which is key to ensuring the productive growth of the Group

Progress in 2018

  • Continued to promote our Group values and purpose programme with Group-wide management roadshows
  • Strengthened leadership structures throughout the Group through key hires across all countries and at Group
  • Average employees across the Group increased by 266, largely due to the acquisitions of Europa Investimenti, Parr Credit and Norfin

Key priorities in 2019

  • Continue to cultivate a culture orientated around our Group Values that rewards positive customer outcomes and promotes an enjoyable working atmosphere
  • Reward high flyers in order to maintain high retention rates of talented employees
  • Attract new talent through offering unique working opportunities combined with attractive compensation and benefits packages