Arrow Global (ARW) is widening its footprint even further. Not content with expanding its debt servicing operations geographically, it’s also making inroads into the capital-light asset management market. It established a £300m co-investment partnership with an unnamed tier one institutional investor, part of its strategy to grow its loan servicing activities on behalf of third parties. Overall asset management revenues rose more than half to £71m.
As the third-largest market for non-performing loans, Italy is an extremely attractive market for the distressed debt purchaser, as banks are forced to deleverage. Following its entrance into the market via the acquisition of Zenith last year, it has bought two more Italian debt servicing businesses – Europa Investimenti and Parr Credit, for €62m (£55.1m) and €20m, respectively. Zenith has outperformed management’s expectations, growing its assets under management by 70 per cent.
In terms of debt purchases, the group acquired a record number of loan notes and portfolios, with a face value of £2.4bn for a purchase price of £224m. That meant its 120-month estimated revenue collection grew 15 per cent to £1.78bn. Meanwhile, overall core collections were up almost a fifth at £342m, representing 103 per cent of the original underwriting forecast.
Analysts at house broker Shore Capital expect an adjusted net asset value of 138p a share at 31 December 2018.
| ARROW GLOBAL (ARW) | ||||
| ORD PRICE: | 390p | MARKET VALUE: | £684m | |
| TOUCH: | 389-391p | 12-MONTH HIGH: | 480p | LOW: 292p |
| DIVIDEND YIELD: | 2.9% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 111p* | NET DEBT: | £948m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p)* |
| 2013 | 93 | 21 | 10 | nil |
| 2014 | 111 | 24.1 | 10 | 5.1 |
| 2015 | 165 | 39.3 | 18 | 7.1 |
| 2016 | 236 | 31.4 | 15 | 9.1 |
| 2017 | 319 | 50.6 | 23 | 11.3 |
| % change | +35 | +61 | +53 | +24 |
| Ex-div: | 31 May | |||
| Payment: | 6 Jul | |||
| *Includes intangible assets of £196m, or 112p a share | ||||
