Arrow Global agrees terms to acquire two Italian firms

The first deal is for Europa Investimenti, a manager of Italian distressed debt investments, for an equity value of €62m (£54.7m).

The core Europa business is not regulated, but because Europa owns a 74 percent stake in an Italian real estate fund management company, Vegagest SGR, the transaction is subject to regulatory approval by the Bank of Italy and is expected to complete in mid-2018.

Europa Investimenti Special Situations, a Europa Investimenti subsidiary which holds a portfolio of Italian luxury goods companies, is not being acquired and will be transferred out of the target group before completion.

The second deal is for 100 percent of Parr Credit, a Rome-based servicer of Italian non-performing loans for an equity value of €20m. There are no regulatory approvals required for the transaction and the acquisition will complete immediately (March 1 2018).

The acquisitions will be funded in cash from existing group resources and are expected to be broadly earnings neutral in 2018 and marginally accretive in 2019.

Lee Rochford, group chief executive of Arrow, told Credit Strategy the results won’t have an immediate impact on the group’s performance, but represent a long-term investment.

He added Italy’s non-performing loan market was Europe’s largest, making up a third of the value with €300bn of NPLs on bank balance sheets. Given Arrow’s presence in Netherlands, Portugal, and Ireland, Europe now accounts for around half the company’s back book.

The announcements come in Arrow’s annual results for 2017, which and seen revenue growth of 35.2 percent, driven by a 19.7 percent increase to £342.2m in core collections and a 53.5 percent increase in asset management income. Assets under management increased from €41.3bn to €53.4bn.

Overall, the business made portfolio acquisitions of £223.9m, a record for the group.

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.

“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.”