Palamon and Electra exit SAV Credit

Sonnie Ehrendal
28 September 2011

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Palamon Capital Partners and Electra Private Equity have exited sub-prime credit card provider SAV Credit.

Following an auction with an undisclosed amount of bidders, Palamon, Electra, and Morgan Stanley exited the company to previous co-investor Värde Partners in a transaction valued at £472m. Palamon reported a double digit IRR over a nine-year holding period, while Electra reported a 1.7x return on money, implying an IRR of around 10-12%.

Equity lead Palamon commented that the financial crisis helped accelerate the growth of the company by allowing investors to back the company in acquiring credit card books from banks. Furthermore, it has assisted the company with strategic advice, new board members, contact networks, and co-investors.

Previous funding
Palamon initially subscribed to a £34m investment in 2002, providing £4.55m then and £25m jointly with Morgan Stanley Alternative Investment Partners in 2004. Electra first invested in the company in 2006, providing up to £25m equity.

Palamon, Electra and Morgan Stanley backed SAV's acquisition of HSBC's Marbles credit card in November 2007, and were supported by new investor Värde Partners in a March 2010 acquisition of Citigroup's credit card portfolio

Company
SAV Credit provides sub-prime credit cards to consumers who have previously been rejected by traditional credit card providers. It currently offers three credit cards, issued by Bank of Scotland: Aqua, launched in 2002; Marbles, acquired from HSBC in 2007; and Opus, acquired from Citigroup in 2010 and subsequently rebranded.

The company, established in 2001, employs around 60 staff and is based in Kent, UK. It manages half a million credit cards with around £600m in credit card assets.

People
Partner Daan Knottenbelt, managing partner Louis Elson and partner Erik Ferm worked on the deal for Palamon. David Symondson, deputy managing partner, worked on the deal for Electra. James Corcoran is the CEO of SAV Credit.

Advisers
Vendor – Slaughter & May, David Wittman (Legal); UBS, James Simpson, Ben Crystal (Corporate finance); KPMG, Sandip Shah, Alistair MacKenzie (Financial due diligence); Auriemma, Matt Simester (Environmental due diligence).
Management – Allen & Overy, Derek Baird (Legal); Jones Day, Adam Greaves, Julian Runnicles (Legal); NM Rothschild & Sons, Jonathan Eddis, Edward Mitting (Corporate finance); PricewaterhouseCoopers, Scott Berryman (Financial due diligence).