Shares of Manchester-based European debt management firm Arrow Global Group rose 13% on Thursday after it announced two proposed acquisitions in Italy and said its 2017 revenue rose 35.2% to £319 million.
Underlying profit after tax rose 24.1% to £56.6 million and assets under management increased from €41.3 billion to €53.4 billion.
Arrow Global CEO Lee Rochford said: “2017 was a transformational year for Arrow Global.
“Our strong underwriting performance and specialised asset management capabilities meant that we have again delivered strong returns to shareholders.
“The shape of our earnings is also continuing to evolve, with higher quality, capital light revenues from our asset management operations growing by over 50%.
“With the acquisition of Mars Capital in the UK and Ireland, we added another country to our geographic portfolio.
“The strategic partnership with a tier-one institutional investor, and the two Italian acquisitions we have announced today, also mark an important step in our European expansion strategy and progress towards building a track record of running discretionary assets for fund clients.
“There has been strong demand for this offering from our clients, and we are focused on fulfilling their operational needs.
“The Arrow model is highly differentiated.
“We are a sophisticated investor and asset manager, underpinned by our strong institutional investor client relationships and unique servicing capabilities; we are not a bulk buyer of loans with vanilla servicing platforms.
“Looking ahead, I’m confident that this approach will support medium term EPS growth in the high teens, and I look forward to updating the market further on strategy at our capital markets day on 8 November 2018.”
Arrow Global said it agreed terms for the two acquisitions in Italy.
“The first is for Europa Investimenti S.p.A., a leading originator and manager of Italian distressed debt investments, for an equity value of €62 million,” said Arrow Global.
“While the core Europa business is not regulated, due to Europa owning a 74% stake in an Italian real estate fund management company, Vegagest SGR S.p.A., the transaction is subject to a regulatory change of control approval by the Bank of Italy and is expected to complete in mid-2018.
“The second is for 100% of Parr Credit S.r.l., a leading Rome-based servicer of Italian non-performing loans (NPLs) for an equity value of €20 million.
“There are no regulatory approvals required for the transaction and the acquisition will complete today.”
Rochford said: “We are delighted to announce the proposed acquisitions of Europa and Parr. Both build on the successful 2017 acquisition of Zenith and give us valuable Italian primary and special servicing capabilities that support our growth ambitions.
“Europa augments our capital-light asset management capabilities, with clear opportunities to offer this across our existing client base.
“The group has completed a number of co-investments with Stefano Bennati and the Europa team, and we have been impressed with their expertise and ability to generate investment volume for the Group and its partners.
“Having looked at a number of acquisition opportunities in Italy, we have been very impressed with Parr’s long-standing customer relationships, deep collections expertise and proven migration capabilities.
“We see clear opportunities to offer Parr services across our existing client base.
“These acquisitions deepen our commitment to Italy, Europe’s largest NPL market.
“With our leading positions in the UK, Portugal, the Netherlands and our recent entry into Ireland we continue to see the benefits of geographic diversification.
“There remain opportunities for growth across the European marketplace.”