An increase in operating costs at Arrow Global (ARW) during the first quarter spooked investors, with the shares closing 13 per cent down following the update. Operating expenses were up more than a third, pushing operating profit down 9 per cent to £22m.
The rise in operating costs was linked to investment costs to do to its ‘One Arrow’ strategy and entrance into the Italian distressed debt market, as well as greater upfront costs associated with an abnormally high proportion of secured debt purchases during the period. However, revenue was up almost a fifth thanks to an increase in capital-light asset management income of around the same amount and a 12 per cent rise in core debt collections. The group bought a record £80m in debt, taking estimated revenue collections to £1.85bn at the end of March.
