As Britons become more and more weighed down by record debt, the first ever flotation of a debt collection company will be announced this week.
Equidebt, largely owned by private equity group RJD Partners, will be valued at about £74m on the Alternative Investment Market.
That will provide up to £56m of new money to strengthen the balance sheet and help secure new business. RJD will maintain a small stake after the float.
Equidebt's chief executive Wes Mulligan said: 'This will improve our credibility-with our banking trading partners - the debt sellers - and so increase their level of comfort in selling larger volumes of debt to us.'
Fox-Pitt Kelton is acting as broker on the deal and is joint financial adviser with Rothschild.
Equidebt's main business is to buy large amounts of debt from banks for a fraction of the face value. It then attempts to recover the loans.
Godfrey Lancashire, president of the Credit Services-Association, said the debt collection industry had only really expanded and become more professional over the past decade, which had led to this float and also acquisitions by US and European players.
Equidebt operates in a market of unparalleled growth. Unsecured consumer lending has risen 42% over the last five years, to reach £211bn in November 2006. Debt collection agencies were last year passed £21bn of debt to chase.
High levels of consumer confidence based on record employment rates and fast house price growth have contributed to the sharp increase in unsecured debt.
Average household debt levels are rising significantly faster than household incomes, with the overall UK debt-to-income ratio reaching 153% by the third quarter of 2006.
Mulligan added that the long-term priority was to develop new types of income, but that at present Equidebt wanted to focus on expanding its core areas.
He said: 'A key objective is to allow us to look at acquiring more portfolios than we do at present.'
Debt collector in market first
Posted - 11 June 2007 : 09:57:47
