SAV Credit (United Kingdom) - Nov 2007

unquote
01 November 2007

Tweet
Facebook
LinkedIn
Google plus
Send to

Palamon-backed SAV Credit Ltd has acquired HSBC’s marbles and Beneficial branded credit card portfolios for a consideration of £385m. The deal makes SAV the largest sub-prime credit card issuer in the UK with a credit card book exceeding £500m of receivables. SAV was runner-up to US-based Compucredit in last year’s auction for Barclaycard’s Monument portfolio and had been looking for a suitable opportunity since. Leigh Allen from Global Consumer Finance Advisory advised SAV on this deal and alerted it to the marbles opportunity. SAV was given the chance to price the deal and having met the seller’s expectations went straight to exclusivity. “SAV was the only UK card issuer with a proven capability in underwriting and servicing sub-prime credit cards and an appetite for growth,” said Daan Knottenbelt, who led the deal for Palamon. “It was set up to specialise in this area and with the marbles acquisition it has moved to number one position in the UK.” Controlling shareholder Palamon and SAV’s other backers, Electra Private Equity and Morgan Stanley Alternative Investment Partners provided SAV with additional equity amounting to approximately £30m to complete the £385m acquisition. The balance of the funding was in the form of a new debt facility provided by Royal Bank of Scotland. Despite difficult market conditions, Palamon reported that Royal Bank of Scotland was wholly supportive of the deal throughout having recognised the solidity of its economics. Palamon backed the founding of SAV in 2002 when it subscribed for £34.35m of SAV’s convertible preference shares committing to invest £4.55m (5 June 2002, page 21). In 2004, Morgan Stanley joined Palamon and together the two groups committed £25m of equity to SAV (28 June 2004, page 14). Electra also came on board in 2006, committing £25m alongside new debt facilities totalling £115m (10 April 2006, page 19).

Company

Tunbridge Wells-based SAV was founded in 2001. Its main product is the aqua Mastercard which is targeted at consumers who have previously been denied access to credit. Before the marbles acquisition, SAV had opened more than 150,000 credit card accounts. Upon the acquisition, another 338,000 have been added to the portfolio. SAV has developed its own underwriting and account management models which allow it to operate successfully in its target market. SAV employs a staff of 40.

People

Daan Knottenbelt led the deal for Palamon. Richard Langstaff is the founder and chief executive of SAV. Lee Rochford led the deal for Royal Bank of Scotland.

Advisers

Debt - Clifford Chance LLP, (Legal)Equity - Clifford Chance LLP, David Pearson, Gavin Solomon (Legal)Equity - Euristix, Martin Rowe (Other Consulting)Equity - Global Consumer Finance Advisory, Leigh Allen (Other Consulting)Equity - Pricewaterhouse Coopers, Phil Heath (Tax)Equity - Slaughter & May , David Wittmann (Legal)