Arrow Global Group PLC (“Arrow Global” or the “Group”) has agreed terms to take ownership of an additional specialist servicing capability and enter into a five-year servicing agreement in the Netherlands. As part of the investment, it will also co-invest in a secured loan portfolio with a face value of circa €1.7 billion (circa 9,300 loans), with the Group taking responsibility for servicing of the entire loan book. The transaction sees Arrow Global partner with an existing strategic fund partner, CarVal Investors, to acquire the platform and loan book which comes from the real estate financing activities of RNHB Hypotheekbank (“RNHB”) – a division of FGH Bank N.V., a fully owned subsidiary of Rabobank.
Given the quality of the secured loan assets (the average loan-to-value being 66%), the investors will secure non recourse leveraged finance to part fund the deal. Arrow Global will acquire a minority interest for a total investment of €25 million.
The transaction also include the transfer of a circa 60-strong incumbent servicing team and its servicing platform to Arrow Global’s wholly owned Netherlands subsidiary, Vesting Finance Servicing B.V. (“Vesting”). Vesting will act as master servicer and will be responsible for administration of the entire loan portfolio.
The purchase represents an expansion of Arrow Global’s footprint in the Netherlands market, following an initial investment in June 2014 and the acquisition of Vesting in May 2016. This is the Group’s second mortgage deal in the Netherlands in the last twelve months.
This transaction underpins existing growth plans. In addition to supporting the Group’s Return on Equity, the portfolio acquisition and its associated specialist servicing team is also expected to provide additional data assets that will further enhance the Group’s existing strong position in the Netherlands market.
The transaction is subject to works council advice and the conclusion of financing documents together with the approval of the Dutch Central Bank.
Tom Drury, Group Chief Executive Officer of Arrow Global said “We are delighted to announce this important transaction, which brings additional servicing capability and long-term servicing contracts to the Group and sees us partner with one of our existing strategic fund partners, CarVal Investors. In acquiring the incumbent servicing solution we add new expertise and data assets to our existing platform. We look forward to providing a great service to the customers and employees of RNHB and to supporting their growth in the future as they continue to deliver a leading service in the Netherlands market.”
“Across the Group, via our Portuguese business, Whitestar, we already have significant secured loan capabilities and this deal allows us to replicate this expertise in an additional geography. This portfolio investment is incremental to the £29 million of the H2 pipeline that we announced were awarded on 31 August 2016. We remain on track to deliver overall full-year results in line with our expectations.”