U.K.-based credit management services provider Arrow Global Group Plc agreed terms for the acquisition of Italian firms Europa Investimenti SPA and Parr Credit Srl.
Arrow Global said March 1 that it agreed to acquire the entire shareholding of Europa Investimenti from Consival Srl and Camargo Srl for a total equity value of €62 million.
The purchase price includes an injection of €11.5 million of new capital into Europa Investimenti, a Milan firm that invests in Italian companies going through the Italian court-administered administration and bankruptcy process, acquiring both assets and nonperforming loans related to distressed companies. Upon completion of the deal, Arrow Global will pay €47 million of the purchase price, with €6 million to be paid six months after completion and €9 million over the five years post-completion.
The deal, which is subject to regulatory approval, is expected to complete in mid-2018.
Europa Investimenti CEO Stefano Bennati will continue to lead the company, along with COO Armando Ranucci and several other members of its management team.
The British firm noted, however, that Europa Investimenti subsidiary Europa Investimenti Special Situations SpA, which holds a portfolio of Italian luxury goods companies, is not included in the acquisition and will be transferred out of the group prior to completion.
Meanwhile, Arrow Global said it would also acquire 100% of the shares of Parr Credit from ERRE Holding Srl for €20 million, with €15 million to be paid on closing and €5 million in the three years postcompletion.
The acquisition of Parr Credit, which does not require regulatory approvals, will complete March 1. The Rome-based servicer of Italian NPLs will continue to be led by CEO Raimondo Romitelli and COO Antonio Giannitti.
Around 200 employees from Parr Credit and 35 employees from Europa Investimenti are expected to be added to Arrow Global following completion of the deals.
Arrow Global will fund both acquisitions in cash from its existing resources, expecting them to be broadly earnings neutral in 2018 and marginally accretive in 2019.
As of the year ended June 30, 2017, the value of gross assets being acquired as part of Europa Investimenti's transaction was €63.2 million, with revenues of €23.6 million and a pretax profit of €9.8 million. Parr Credit, meanwhile, had revenues of €17.5 million as of the year ended Dec. 31, 2017.
"These acquisitions deepen our commitment to Italy, Europe's largest NPL market. With our leading positions in the U.K., Portugal, the Netherlands and our recent entry into Ireland we continue to see the benefits of geographic diversification," Arrow Global Group CEO Lee Rochford said, noting that both companies give the group valuable Italian primary and special servicing capabilities that support its growth ambitions.
