Cabot eyes back end of 2017 for IPO

The owner of Cabot Credit Management believes the debt purchaser’s planned Initial Public Offering could be completed by the end of 2017.

Cabot eyes back end of 2017 for IPO

Encore Capital Group – the US-based debt purchase and credit management group which has a majority stake in Cabot – has already announced the IPO with a potential end date, and sources have since told Credit Strategy the end of 2017 is still possible.

Earlier this year Kenneth Vecchione, president and chief executive of Encore, said the board believes Cabot’s equity value has grown through operational improvement, market consolidation and expansion into other European countries. In a statement Vecchione said the IPO will help “crystallise the value” Encore has created within the group’s European franchise.

He added in the statement: “We are in the very early stages of the IPO process, but we believe that it could be completed as early as the back end of 2017.”

Goldman Sachs, Jefferies and Morgan Stanley are understood to be advising on the potential flotation.

Cabot, which published its results for the first three months of 2017 last month, confirmed in a statement that the board was “assessing options” in relation to an IPO, and was undertaking “necessary preparations to ensure readiness in this regard”, subject to further decisions among the directors.

When approached for comment on a timeline, by Credit Strategy, for the IPO and those advising on the listing, a spokesperson for Cabot confirmed only via statement that the board is “reviewing strategic options, but no decisions have been finalised.”

Recent results statements for Cabot have shown the group’s new venture into mortgage servicing and increased debt purchase activity across western Europe.  Last year more than 50 percent of Cabot’s capital was deployed in portfolio investments in the UK, while the rest was split between Portugal (six percent), France (five percent), Spain (36 percent) and Ireland (1.6 percent).

In a UK investor briefing earlier this year for Cabot’s annual results for 2016, Ken Stannard, chief executive of Cabot, was asked of the impact of Intrum Justitia’s takeover of competitor 1st Credit.

Stannard replied: “I don’t think Intrum is an aggressive, risk-seeking organisation. They have bought an asset that has a lot of great people in it that’s been in a mode of run down for some time and not been acquiring (portfolios), so the pricing capability needs to be built up and they’ve got a lot of investment to do in that platform.”

Alongside Nasdaq-listed Encore’s majority stake in Cabot, private equity firm JC Flowers has the remaining shareholding.