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Cabot Credit Management Limited Announcement of Intention to Float on the London Stock Exchange PDF Print E-mail
Friday, 20 October 2017
Cabot, the UK's leading credit management services provider, today announces its intention to proceed with an initial public offering (the "IPO" or the "Offer"). The Company intends to apply for admission of its ordinary shares ("Shares") to the premium listing segment of the Official List of the Financial Conduct Authority (“FCA”) and to trade on the main market for listed securities of the London Stock Exchange (together "Admission"). The Offer will comprise an offer of shares to institutional investors. 

Business Highlights
- Cabot is one of the largest credit management services providers in Europe and the market leader in the UK and Ireland[2] with total 120-Month ERC of £2.2 billion

Cabot provides a range of credit management services across a broad client base that includes some of the largest credit providers in Europe

Cabot’s primary business relates to the purchase of unsecured consumer debt from financial services institutions, although 37% of our collections for the year ended 31 December 2016 were on behalf of third party clients

Over its 20 year history, Cabot has invested a total of £2.1 billion in acquiring over £21 billion in face value of loan portfolios and has collected a cumulative £2.9 billion from these portfolios as at 30 June 2017

Management believe Cabot is the market leader in the UK and Ireland, where Cabot has built a sustainable competitive advantage. Cabot is also amongst the leading providers in Spain, France and Portugal Cabot leverages its data and processing capabilities to enable it to collect more effectively than industry benchmarks in UK financial services debt[3]

Cabot has a strong financial profile with an Adjusted EBITDA of £247.8 million as of 31 December 2016, which grew by a CAGR of 21% between 2011 and 2016

Its mid-term financial targets include a low- to mid-twenties Return on Equity, a leverage ratio of approximately 3.0 to 4.0x (based on Cabot’s net debt divided by Adjusted EBITDA for the previous 12 month period), and an expected first dividend payment in the first half of 2018 at a 50% pay-out ratio based on underlying profit reflecting the period from the point of Admission to 31 December 2017

Given the strong market opportunities for growth, Cabot is targeting a leverage ratio of 3.75 in the short term (based on its net debt as of and Adjusted EBITDA for the 12 months ended 30 June 2017), after taking into account the effects of estimated proceeds of the Offer and the completion of the acquisition of Wescot Credit Services Limited, which is expected to occur in the fourth quarter of 2017 pending FCA approval

Cabot intends to deliver long-term sustainable growth and strong cash returns by continuing to focus on acquiring and servicing portfolios in the attractive UK market and underpenetrated European geographies. Its depth and breadth of data assets, proven litigation scorecard and constant willingness to find ways to innovate and meet clients’ needs sets it apart from its peers

Ken Stannard, Chief Executive Officer of Cabot Credit Management Limited said: “This is a very exciting episode in Cabot’s continued growth and development. Having built strong and entrusted Credit Management Service businesses in the UK and Ireland we are now well into the construction of leading platforms in three new markets. As one of the largest players in Europe it now feels right to be listing on the London Stock Exchange. We are faced with significant untapped growth potential in each jurisdiction as creditor clients continue to partner with us to improve their own performance. We have a clear strategy of generating sustainable competitive advantage on the foundation of superior collections effectiveness and outstanding customer treatment. The executive team, with the support of our Board, will continue to work hard to execute this strategy and maintain attractive returns for our shareholders."

Andy Haste, Independent Chairman Elect of the Board of Cabot Credit Management Limited, said: “At a time when there is an increased focus on consumer credit, Cabot continues to lead the industry as it works to identify affordable solutions, which help customers with their financial recovery. I have been impressed by the work that Ken and his team have done in building the business in a responsible and transparent way, focused on delivering fair outcomes and a positive experience for its customers. I look forward to supporting the team in that work at what is an important moment in Cabot’s development.”

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