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JC Flowers- and Encore-backed Cabot to list on LSE

Kenny Wastell
@kennywastell
23 October 2017

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JC Flowers- and Encore Capital-backed debt collection business Cabot Credit Management has announced its intention to float on the London stock exchange.

The IPO is expected to raise £195m and will enable JC Flowers and Encore to partially realise their investments. The process will also raise cash for "general corporate purposes", which may include repayment of outstanding debts.

Following the admission, Cabot will have a free float of at least 25%, with an overallotment option equivalent to 15% of the offer size.

JC Flowers acquired Cabot from AnaCap Financial Partners in a secondary buyout worth a reported £800m in May 2013. The acquirer then sold a 50.1% stake in the business to Encore for £128m just two weeks later, with an option for Encore to purchase the remaining shares in CCM within the next four to six years.

According to a statement, Cabot acquired £207m of debt portfolios in the 12 months to June 2017 and reduced its leverage from 4.6x to 4.1x during the same period. Following the flotation, the company is targeting a leverage ratio of 3.75x.

Under the vendors' tenure, the business has grown its existing operations in Ireland and expanded into the Spanish, Portuguese and French markets. It is also in the process of acquiring Wescot Credit Services, a deal that is awaiting FCA approval by the end of the year.

Cabot acquires unsecured consumer debt from financial service institutions. The business generated a turnover of £270m in 2016 with adjusted EBITDA of £247.8m, according to the statement.

The listing is scheduled to take place in November 2017. Goldman Sachs and Morgan Stanley are acting as joint global coordinators, joint bookrunners and joint sponsors for the process, with Jefferies International and Numis Securities acting as joint bookrunners. Lazard is acting as financial adviser to Cabot.

Cabot is headquartered in West Malling, Kent, and was formed in 2011 from two of AnaCap's portfolio companies, Cabot Financial Holdings and Apex Credit Management.