Debt Purchaser, Arrow Global Group has agreed term with the potential acquisition of Mars Capital UK and Ireland, a leading UK and Irish mortgage servicing businesses, for an enterprise value of £15.5 million.
The acquisition further strengthens Arrow Global’s asset management capabilities, while providing a strategic entry into Ireland, a new market for the Group that offers significant debt purchasing and servicing potential.
The transaction is subject to regulatory approval by the Financial Conduct Authority (“FCA”) and fulfillment of the Central Bank of Ireland notification obligations. It is expected to complete in late 2017.
Mars Acquisition Limited is the holding company for a group of businesses owned by funds advised by Oaktree and founders, Matt Gilmour and Alex Forrester. It comprises the Mars Capital UK and Irish secured servicing platforms (to be acquired by Arrow Global), an Irish property management business, a Spanish servicing platform and a UK mortgage origination business (the latter three businesses are not being acquired and will be separated-out before completion).
Mars Capital provides servicing for mortgages covering 1st / 2nd lien residential, buy-to-let and SME commercial mortgages, and provides a full loan lifecycle servicing, from loan origination support to late stage recoveries and real estate sales, with particular focus on managing distressed mortgage NPLs. As at 31 July 2017, Mars Capital was servicing over 10,000 customer accounts and had £1.6 billion of assets under management in UK and Ireland. For the year ended March 2017, Mars Capital generated revenue of £9 million and Profit Before Tax of £2 million.
Mars Capital’s UK and Irish teams will add approximately 65 dedicated management and staff to Arrow Global’s team.
In addition, Arrow Global has announced the establishment of a strategic partnership in the UK and Ireland with Oaktree Capital Management, L.P. a leading global asset manager with around USD$100 billion under management.
Arrow Global strategic partnership with Oaktree to acquire future UK and Irish residential mortgage portfolios together. The agreement will also ensure Oaktree’s existing UK and Irish residential mortgage assets continue to be serviced on Mars Capital’s servicing platform for an agreed time.
Lee Rochford, Group Chief Executive Officer of Arrow Global, commented: “We are delighted to announce the proposed acquisition of Mars Capital’s UK & Irish mortgage servicing businesses as well as our strategic partnership with Oaktree. These agreements expand our European footprint, augment our capital-light asset management capabilities, provide further impetus to our profitable growth trajectory and are completely aligned with our strategic direction.
“We are seeing marked demand for servicing solutions that meet the diverse requirements of multi-asset and multi-jurisdictional credit portfolios. Mars Capital adds depth of expertise in the secured real estate market to our servicing offering and we see clear opportunities to offer this across our existing client base.”
“The acquisition also opens up the Irish market, one of Europe’s largest NPL and servicing markets. With our leading positions in the UK, Portugal, The Netherlands and our recent entry into Italy we continue to see the benefits of geographic diversification. There remain opportunities for growth across the European marketplace.
“The strategic partnership with Oaktree demonstrates our innovative origination capabilities. The partnership will provide significant portfolio investment and asset management opportunities going forward in the UK and Ireland, strengthening Arrow Global’s highly visible earnings stream. We are excited by these opportunities and we look forward to welcoming the Mars Capital team to Arrow Global.”
Kevin Blake, Managing Director, Mars Capital, said: “We are delighted to be joining Arrow Global. With the support of Mars Capital’s founders, Matt Gilmour and Alex Forrester, we have built a strong, focused business in the UK and Ireland which will sit well in Arrow Global’s asset management capability set. We believe this provides the enlarged Group with significant opportunity. Like Arrow Global we are a customer-centric business and place great emphasis on service levels and customer outcomes. I and the rest of the team look forward to working with the Arrow Global management team going forward.”
Chris Boehringer, Oaktree Capital Management, said: “We recognise Arrow Global as one of the leaders in Europe in the secured and unsecured investment and servicing space and their breadth of expertise and servicing scale give us a partner who can work alongside us in the UK and Ireland as we seek to take advantage of future investment opportunities.”<