Completion of Acquisition

28 April 2017

Arrow Global Group PLC

Completion of Acquisition

Arrow Global Group PLC (“Arrow Global” or the “Group”) announces that it has today completed the acquisition of Zenith Service S.p.A (“Zenith”), a leading servicing business with operations in Milan and Rome, having received all necessary regulatory approvals from the Bank of Italy.

The acquisition was announced on 6 December 2016 and confirmed that, subject to today’s completion, Arrow Global would acquire Zenith for an enterprise value of EUR17m.  It is expected to be earnings neutral after taking into account amortisation of the acquisition intangible assets and is funded from cash resources, with 60% payable on closing and 40% payable 12 months after closing.

Lee Rochford, Group chief executive, Arrow Global Group, said: “Today marks our formal entry into the highly active Italian structured finance market.  It gives us immediate scale and presence in one of Europe’s largest debt markets and we are excited by the possibilities this brings. 

“Zenith has an experienced management team, a strong and established client base of leading Italian and international banks, and a great reputation for quality and service.  It offers us an excellent platform from which to grow our business in Italy.”

The Group’s entry into Italy expands its European footprint, building on its top three market positions in the UK, Portugal and Benelux and reinforces its position as a leading European debt purchase and management business.

The acquisition offers Arrow Global valuable insight into the Italian market, whilefurther diversifying its income streams and increasing theweighting of asset management revenues across the Group, which we expect to be 25% of total revenues in 2017.   ArrowGlobal and Zenith already share some common clients, and as such, Zenith provides a low risk, robust platform and important servicing capabilities. 

Zenith was established in 1999 and manages and oversees securitised and non-securitised loan portfolios. The business has over 80 staff and typical clients include Italian and international banks, leasing companies, hedge funds and other financial entities.

Zenith has ranked as a master servicer since 2004 and the business has Master Servicing agreements for over EUR14.2bn of assets under management.  On 11 April 2017, Zenith’s rating was upgraded by Standard & Poor’s to strong, the highest level of ranking as a master servicer in Italy, with a stable outlook. 

The company further benefits from the stability of its revenue basis, which is linked to multi-annual mandates. Zenith offers a full suite of services including master servicing, back-up servicing, structuring and arranging loan notes, ECB and regulatory reporting and pool auditing.  Zenith is also the leader in the Italian CQS servicing market, where customers elect to manage their debts by a direct deduction from their salary.

As indicated in our full year results announcement on 2 March 2017, we can confirm that as we have completed the acquisition, with immediate effect, John Calvao will be Country Head for Italy, and Joao Bugalho will take up responsibility as Country Head for Portugal.

Enquiries:

Arrow Global                                                                                                     +44 (0)161 242 5885

Lee Rochford, Group CEO

Robert Memmott, Group CFO

Anthony Frost, Group Communications

Instinctif Partners                                                                                           +44 (0)20 7457 2020

Giles Stewart

About Arrow Global

Established in 2005, Arrow Global specialises in the purchase, collection and servicing of non-performing loans. We identify, acquire and manage secured and unsecured defaulted loan portfolios from financial institutions, such as banks and credit card companies, as well as retail chains, student loans, motor credit, telecommunication firms and utility companies.

We play an active role in helping financial institutions deleverage and recapitalise in order to increase mainstream lending. By purchasing and managing non-performing loans and other core assets, we provide valuable capital and expertise to a growing European market.

We are a regulated business in all of our European markets, and as at December 2016, we had assets under management in excess of EUR41bn, over 1,500 colleagues and 9.3 million customer accounts.

Forward looking statements

This announcement contains statements that constitute forward-looking statements relating to the business, financial performance and results of the Group, Zenith and the industry in which they each operate. These statements may be identified by words such as “expectation”, “belief”, “estimate”, “plan”, “target”, or “forecast” and similar expressions or the negative thereof; or by forward-looking nature of discussions of strategy, plans or intentions; or by their context. All statements regarding the future are subject to inherent risks and uncertainties and various factors could cause actual future results, performance or events to differ materially from those described or implied in these statements. Such forward-looking statements are based on numerous assumptions regarding the Group’s present and future business strategies, the acquisition of Zenith and the environment in which the Group will operate in the future. Further, certain forward looking statements are based upon assumptions of future events which may not prove to be accurate and neither Arrow nor any other person accepts any responsibility for the accuracy of the opinions expressed in this document or the underlying assumptions. The forward-looking statements in this document speak only as at the date of this announcement and Arrow assumes no obligation to update or provide any additional information in relation to such forward-looking statements.