JC Flowers sells half of CCM to Encore

Ellie Pullen
31 May 2013

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JC Flowers has sold a 50.1% stake in Cabot Credit Management (CCM) to Encore Capital Group for ТЃ128m, just two weeks after acquiring the UK-based consumer debt manager from AnaCap Financial Partners.

The acquisition by Encore comes with an option for the US debt management and recovery company to purchase the remaining shares in CCM within the next four to six years.

JC Flowers managing director Tim Hanford told the Financial Times that the plan to jointly own CCM with Encore had been in place for quite a while. The deal is expected to close later on this year.

Hanford went on to say that JC Flowers has a long-term relationship with Encore and had accounted for the sale of a controlling share in CCM when the firm acquired the company from AnaCap two weeks ago, for an estimated £800m including debt. According to the FT, Encore always had the intention of buying the stake in CCM.

Encore's president stated that the San Diego-based company had been looking for a UK partner for several years. The acquisition will provide CCM with yet more capital to purchase debt and expand into new asset categories.

Company
CCM was formed in 2011 and is headquartered in Kings Hill, Kent, with additional offices in Stratford-upon-Avon and Dublin. The company employs 700 staff.

CCM acquires and manages consumer debt. The company is divided into four branches: Cabot Financial, Cabot Financial Ireland, Apex Credit Management and Apex Discovery Solutions. The business specialises in debt purchases, contingency collections and customer tracing.

CCM currently holds £7.7bn in assets under management. The company recorded revenue of £161m in the year ending December 2012, as well as an EBITDA of £111m, equating to a substantial profit margin of 69%.

People
Neil Clyne is the CEO of CCM, while Glen Crawford is the company's managing director. J Christopher Flowers is chairman of JC Flowers. Ken Vecchione is Encore's president and incoming CEO.

Advisers
Equity - Morgan Stanley (Corporate finance); Macfarlanes (Legal); Ernst & Young (Financial due diligence); LEK (Commercial due diligence).
Company - Jamieson (Corporate finance); Jones Day (Legal).
Vendor - Citi (Corporate finance); William Blair (Corporate finance); Deloitte (Financial due diligence); CMS Cameron McKenna (Legal).