UK Debt Buyer Acquired by Private Equity in $400 million Deal

One of the fastest growing debt buying and collection firms in Europe was sold to a private equity firm in a deal announced Monday that was reportedly worth as much as $400 million.

Lowell Group, based in Leeds, United Kingdom, was snapped up by private equity firm Exponent Private Equity LLP based in London. Lowell was backed by private equity firm Cabot Square Financial. Although no terms were released, the British business press has quoted sources close to the deal as saying the transaction was for as much as $400 million.

"This is right in line with valuations we’re seeing for European debt buyers, with multiples getting as high as 10 times adjusted EBITDA," said Mark Russell, director at ARM advisory firm Kaulkin Ginsberg. The advisory firm said recently that merger and acquisition activity in the ARM industry outside the U.S. would increase in 2008 ("ARM M&A Solid So Far and Foreign Deal Activity May Get Stronger," April 7).

Lowell has been reporting explosive growth recently, announcing that revenues for its first fiscal quarter of 2008 were up 71 percent from Q1 2007 ("UK Purchaser Lowell Reports Strong Start to 2008," Feb. 1). Lowell is projecting total revenue growth of more than 50 percent for all of 2008. The firm was also named "Venture Capital-Backed Business of the Year" last month by UK magazine Growing Business.

The company employs some 300 people in Leeds with a plan to double that total in the next five years.

Following the takeover Adrian Hill, former chief executive of HFC Bank and general manager Direct Businesses at HSBC, will be appointed non-executive chairman of Lowell.

Lowell chief executive James Cornell said in a statement, "We are delighted to have completed this deal and look forward to our partnership with Exponent which has a great track record for working with management teams."

Officials at Exponent commented, "We’re very pleased to be backing James and his team and Adrian Hill whose extensive experience in UK consumer lending will make an important contribution to Lowell’s future. We think the business has great potential and look forward to working alongside the management team in the next stage of its growth."