Arrow Global announces servicer acquisition and Oaktree partnership

The Mars acquisition
The deal will involve Arrow, subject to regulatory approval, purchase Mars Acquisition – the holding company for a group of businesses owned by funds advised by Oaktree and the servicer’s founders, Matt Gilmour and Alex Forrester. Mars Acquisition comprises the Mars Capital UK and Irish secured servicing platforms.

There are other businesses within the Mars company which are not being acquired by Arrow. These are an Irish property management business, a Spanish servicing platform and a UK mortgage origination business. These three businesses will be separated out before completion.

Mars Capital, which is being acquired by Arrow, provides servicing for residential, buy-to-let and SME commercial mortgages, and as well as full lifecycle servicing; from loan origination support to late stage recoveries and real estate sales. The business has a particular focus on managing distressed mortgage NPLs.

The acquisition will produce servicing revenue from existing portfolios, securitisations and Magellan Homeloans, a specialist mortgage originator, while providing access to its proprietary IT platform, designed to service residential and small-ticket commercial mortgage assets.

As at July 31 2017, Mars Capital was servicing over 10,000 customer accounts and had £1.6bn of UK and Irish assets under management.

’The acquisition will be funded in cash from existing group resources’

For the year ended March 2017, Mars generated revenues of £9m and pre-tax profits of £2m. Mars Capital’s UK and Irish teams will add around 65 staff to Arrow’s team.

Arrow said the acquisition will be funded in cash from existing group resources, with £9m paid on closing and the rest paid on the fourth anniversary of completion. Transaction-related expenses are expected to be about £1.2m.

Kevin Blake, managing director of Mars Capital, said: “With the support of Mars Capital’s founders, Matt Gilmour and Alex Forrester, we have built a strong, focussed 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.”

The Oaktree partnership
Rochford said the partnership will provide significant portfolio investment and asset management opportunities in the UK and Ireland.

Chris Boehringer of Oaktree Capital Management said: “We recognise Arrow Global as one of the leaders in Europe in the secured and unsecured investment and servicing space. 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.”