Arrow Global Group has announced that it intends to enter the Italian market having agreed terms to acquire Zenith Service SpA (‘Zenith’), a leading servicing business in the Italian structured finance market, for an enterprise value of €17m. The transaction is subject to regulatory approval by the Bank of Italy.
Zenith has a strong and established client base of leading Italian and international banks and funds, The acquisition of Zenith is a strategic purchase that gives Arrow immediate scale and presence in one of Europe’s largest debt markets. Zenith is a leading servicer of salary assignment loans, managing €1.9bn of CQS assets. As at June 2016, the estimated stock of the securitized market for CQS in Italy amounted to more than €3.2bn. Zenith has developed a reputation for quality and service in a complex, regulated market with €14.1bn assets under management across multiple asset classes. It expects revenues of over €11m and EBITDA of approximately €3.2m in 2016.
Arrow will retain Zenith’s management team and existing service offering, but as part of its wider Italian strategy, plans to pursue a broader client offering. The acquisition will further expand Arrow’s European footprint, building on the group’s top three market positions in the UK, Portugal and Benelux.
Tom Drury, Chief Executive Officer of Arrow said “Today’s agreed acquisition of Zenith marks our strategic entry into Italy. Italy is one of Europe’s largest and fastest growing potential markets for servicing and acquiring non-performing loans and other financial services assets. Zenith is our first step in creating a strong market proposition in Italy, where Arrow and Zenith already share some common clients. Zenith provides a low risk, robust platform and important servicing capabilities. Clients value Arrow’s breadth of expertise, data capability, reach and scale and Zenith meets all of these criteria. Additionally the acquisition affords us an excellent vantage point from which to consider asset servicing growth in line with our targeted returns.
“Zenith is a leading Italian master servicing business in the highly active structured finance market and the number one player in the Italian Asset Backed Securities market for CQS, complementing our existing expertise in master servicing and servicing structured finance transactions. The acquisition further diversifies our income streams and brings a strong and visible pipeline. We look forward to working with Zenith’s founder and CEO, Giuseppe R. Amato and our new colleagues as we continue to deliver on our strategic objectives. We continue to see opportunities for growth across the European marketplace and we will maintain our focus and discipline in terms of their evaluation.”
Giuseppe R. Amato, founder and CEO of Zenith, said “We are delighted to be joining Arrow. It is an exciting time for the business as it continues to expand and develop its European strategy. We have built a strong business which complements well Arrow’s existing expertise. We share the same customer-centric values and service quality and I look forward to working with Arrow’s management team to further strengthen and grow our business in Italy.”