Arrow Global (ARW) buys distressed debt portfolios from mainstream lenders, and has been growing fast. That's largely because it is accumulating loan books, and the earnings streams that come with them, faster than the loans are expiring. So underlying operating profit jumped 59 per cent during 2013 to £52.8m and customer accounts grew 42 per cent to 5.1m.
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The group’s systems for managing borrowers in default also leaves it far better placed than mainstream lenders to boost collections from the portfolios it buys. Broker Numis Securities reckons that Arrow typically boosts paying customers in an acquired portfolio by 50 per cent, despite the vendors having already worked hard on the accounts prior to disposal.