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|Arrow Global PLC announces expansion of European footprint|
|Tuesday, 20 September 2016|
Arrow Global Group PLC (“Arrow Global” or the “Group”), a leading European purchaser and manager of debt portfolios confirms that, in line with its growth and diversification strategy, it has agreed terms to take ownership of an additional specialist servicing capability and enter into a five-year servicing agreement in the Netherlands. As part of the investment, it will also co-invest in a secured loan portfolio with a face value of circa €1.7 billion (circa 9,300 loans), with the Group taking responsibility for servicing of the entire loan book.
The transaction sees Arrow Global partner with an existing strategic fund partner, CarVal Investors, to acquire the platform and loan book which comes from the real estate financing activities of RNHB Hypotheekbank (“RNHB”) – a division of FGH Bank N.V., a fully owned subsidiary of Rabobank.
Given the quality of the secured loan assets (the average loan-to-value being 66%), the investors will secure nonrecourse leveraged finance to part fund the deal. Arrow Global will acquire a minority interest for a total investment of €25 million.
The transaction also include the transfer of a circa 60-strong incumbent servicing team and its servicing platform to Arrow Global’s wholly owned Netherlands subsidiary, Vesting Finance Servicing B.V. (“Vesting”). Vesting will act as master servicer and will be responsible for administration of the entire loan portfolio.
· Adds additional expertise, platform capabilities and five-year servicing revenues to the Group’s wholly owned Netherlands servicing business, Vesting
· Portfolio assets are predominantly performing secured loans for primarily buy-to-let residential and mixed usage properties, with a smaller proportion of CRE assets typically being industrial, retail, leisure or office properties
· Consistent with its strategy of partnering with credit funds to co-invest and manage portfolios of receivables – joining an existing fund partner, CarVal lnvestors, to enter into these asset classes within the geography
· Arrow Global to invest a total of €25 million in the platform and underlying loan assets with a face value of circa €1.7 billion
· CarVal Investors intends to run the RNHB as a going concern, continuing to lend to new and existing customers. Arrow Global would benefit from any servicing this generates and also retains the option to participate in these future investments
The purchase represents an expansion of Arrow Global’s footprint in the Netherlands market, following an initial investment in June 2014 and the acquisition of Vesting in May 2016. This is the Group’s second mortgage deal in the Netherlands in the last twelve months.
This transaction underpins existing growth plans. In addition to supporting the Group’s Return on Equity, the portfolio acquisition and its associated specialist servicing team is also expected to provide additional data assets that will further enhance the Group’s existing strong position in the Netherlands market.
The transaction is subject to works council advice and the conclusion of financing documents together with the approval of the Dutch Central Bank.
Tom Drury, Group Chief Executive Officer of Arrow Global commented: “We are delighted to announce this important transaction, which brings additional servicing capability and long-term servicing contracts to the Group and sees us partner with one of our existing strategic fund partners, CarVal Investors. In acquiring the incumbent servicing solution we add new expertise and data assets to our existing platform.
“We look forward to providing a great service to the customers and employees of RNHB and to supporting their growth in the future as they continue to deliver a leading service in the Netherlands market.
“Across the Group, via our Portuguese business, Whitestar, we already have significant secured loan capabilities and this deal allows us to replicate this expertise in an additional geography. This portfolio investment is incremental to the £29 million of the H2 pipeline that we announced were awarded on 31 August 2016. We remain on track to deliver overall full-year results in line with our expectations.”
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