Cabot Financial Ipo Prospectus

Cabot financial ipo prospectus


This announcement is an advertisement for the purposes of the UK Prospectus Rules of the FCA and not a prospectus.

This announcement is not an offer to sell, or a solicitation of an offer to acquire, securities in the United States or in any other jurisdiction, including in or into Australia, Canada or Japan.

Neither this announcement nor anything contained herein shall form the basis of, or be relied upon in connection with, any offer or commitment whatsoever in any jurisdiction.

Cabot financial ipo prospectus

Investors should not purchase any shares referred to in this announcement other than solely on the basis of information that is contained in the prospectus (the “Prospectus”) expected to be published by Cabot Credit Management Limited (to be renamed Cabot Credit Management PLC prior to publication of the Prospectus) (the “Company”) in due course in connection with the proposed admission of its ordinary shares (the “Shares”) to the premium listing segment of the Official List of the FCA and to trading on the main market for listed securities of London Stock Exchange plc (the “London Stock Exchange”).

Copies of the Prospectus will, following publication, be available for inspection from

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References in this announcement to “Cabot” mean the Company, together with its consolidated subsidiaries and subsidiary undertakings.

20 October 2017

Cabot Credit Management Limited

Announcement of Intention to Float on the London Stock Exchange

Cabot, the UK’s leading credit management services provider, today announces its intention to proceed with an initial public offering (the “IPO” or the “Offer”).

The Company intends to apply for admission of its ordinary shares (“Shares”) to the premium listing segment of the Official List of the Financial Conduct Authority (“FCA”) and to trade on the main market for listed securities of the London Stock Exchange (together “Admission”).

Confidential treatment request ipo

The Offer will comprise an offer of shares to institutional investors.

Business Highlights1 


Cabot is one of the largest credit management services providers in Europe and the market leader in the UK and Ireland2 with total 120-Month ERC of £2.2 billion


Cabot provides a range of credit management services across a broad client base that includes some of the largest credit providers in Europe


Cabot’s primary business relates to the purchase of unsecured consumer debt from financial services institutions, although 37% of our collections for the year ended 31 December 2016 were on behalf of third party clients


Over its 20 year history, Cabot has invested a total of £2.1 billion in acquiring over £21 billion in face value of loan portfolios and has collected a cumulative £2.9 billion from these portfolios as at 30 June 2017


Management believe Cabot is the market leader in the UK and Ireland, where Cabot has built a sustainable competitive advantage.

Cabot is also amongst the leading providers in Spain, France and Portugal


Cabot leverages its data and processing capabilities to enable it to collect more effectively than industry benchmarks in UK financial services debt3 


Cabot has a strong financial profile with an Adjusted EBITDA of £247.8 million as of 31 December 2016, which grew by a CAGR of 21% between 2011 and 2016


Its mid-term financial targets include a low- to mid-twenties Return on Equity, a leverage ratio of approximately 3.0 to 4.0x (based on Cabot’s net debt divided by Adjusted EBITDA for the previous 12


month period), and an expected first dividend payment in the first half of 2018 at a 50% pay-out ratio based on underlying profit reflecting the period from the point of Admission to 31 December 2017


Given the strong market opportunities for growth, Cabot is targeting a leverage ratio of 3.75 in the short term (based on its net debt as of and Adjusted EBITDA for the 12 months ended 30 June 2017), after taking into account the effects of estimated proceeds of the Offer and the completion of the acquisition of Wescot Credit Services Limited, which is expected to occur in the fourth quarter of 2017 pending FCA approval


Cabot intends to deliver long-term sustainable growth and strong cash returns by continuing to focus on acquiring and servicing portfolios in the attractive UK market and underpenetrated European geographies.

Cabot financial ipo prospectus

Its depth and breadth of data assets, proven litigation scorecard and constant willingness to find ways to innovate and meet clients’ needs sets it apart from its peers

Ken Stannard, Chief Executive Officer of Cabot Credit Management Limited said:

“This is a very exciting episode in Cabot’s continued growth and development. Having built strong and entrusted Credit Management Service businesses in the UK and Ireland we are now well into the construction of leading platforms in three new markets.

Manuel utilisateur everflo ipo

As one of the largest players in Europe it now feels right to be listing on the London Stock Exchange. We are faced with significant untapped growth potential in each jurisdiction as creditor clients continue to partner with us to improve their own performance.

Cabot financial ipo prospectus

We have a clear strategy of generating sustainable competitive advantage on the foundation of superior collections effectiveness and outstanding customer treatment. The executive team, with the support of our Board, will continue to work hard to execute this strategy and maintain attractive returns for our shareholders.”

Andy Haste, Independent Chairman Elect of the Board of Cabot Credit Management Limited, said:

“At a time when there is an increased focus on consumer credit, Cabot continues to lead the industry as it works to identify affordable solutions, which help customers with their financial recovery.

I have been impressed by the work that Ken and his team have done in building the business in a responsible and transparent way, focused on delivering fair outcomes and a positive experience for its customers.

Leverage our market expertise

I look forward to supporting the team in that work at what is an important moment in Cabot’s development.”

Investment highlights


One of the largest credit management service providers in Europe, and the market leader in the UK and Ireland

Significant benefits from scale and market leadership experience through a number of economic cycles

Market leader in the UK and Ireland and first large credit management company in the UK to be authorised by the FCA and the first credit management service company in Ireland to be authorised by the Central Bank of Ireland

Strong track record of customer focus and compliance

Strong reputation with clients built upon collections experience over a 20-year period

Significant data assets assist Cabot in identifying the appropriate collection strategy for each customer

Comprehensive end-to-end service offering covering a wide range of asset classes in five European jurisdictions


Industry leader in an attractive UK market with differentiated collections capabilities to deliver enhanced performance across portfolio profiles

The UK is the largest credit management services market in Europe with the highest volume of debt sold per annum

Cabot is the largest4 and one of the most sophisticated players in the UK and is the leader in financial services debt purchases, with 96% of its total UK 120-Month ERC coming from a broad range of UK financial services firms

Proprietary and differentiated data assets, collection experience, customer centric model, compliance focus and litigation capability drives superior collections performance5 

Competitive advantage in non-paying portfolios through proprietary litigation scorecard


Competitive advantage in paying portfolios through high interaction call framework

One of the highest customer satisfaction ratings in the financial services sector (4th out of 15 when benchmarked against the firms included in the July 2017 UK Customer Satisfaction Index for the Banks and Building Societies sector) and a lower level of complaints referred to the UK Financial Ombudsman Service (FOS) than selected high street banks


Established participant in the underpenetrated European market with significant growth potential and increasing barriers to entry

Most non-performing debt still managed in-house by credit providers

Increasing regulatory complexity and cost of compliance driving long term trend towards outsourcing to specialist credit management service companies such as Cabot

Higher compliance standards creating higher barriers to entry for credit management providers

Significant growth potential in European markets where propensity to sell debt remains significantly below more established markets such as the UK


Disciplined approach to geographic expansion into new markets with significant growth potential, leveraging successful Ireland experience

Leverage Cabot’s market leadership in the UK and experience gained in growing the Irish business to replicate its success in new markets

Entered the Irish market in 2007 and has since grown to be the market leading credit management firm, with board level relationships with all the major Irish banks

Disciplined approach to expansion through prioritising the building of strong management teams, developing data warehousing and pricing capabilities and developing the operational differentiation required to outperform in local markets

Significant untapped potential in markets including Ireland, Spain, Portugal and France

Cabot’s businesses in Spain, France and Ireland have a long track record with significant accumulated data, providing a basis for growing Cabot’s presence in those markets


Compelling financial profile combining growth, strong returns and resilience

Cabot’s Adjusted EBITDA grew by a CAGR of 21% between 2011 and 2016

Adjusted EBITDA for the year ended 31 December 2016 of £247.8 million with an Adjusted EBITDA Margin of 64.5% increasing to 66.4% for the six months ended 30 June 2017

High revenue visibility from owned assets, with 83% of revenue for the year ended 31 December 2016 generated from assets owned at the beginning of the year

Cabot’s actual collections have over the past few years consistently outperformed historic ERC forecasts; collections for the six months ended 30 June 2017 were 104% above the ERC forecast as at 31 December 2016

Disciplined control of core operating expenses, expected to grow in line with inflation (approximately 2.5%) prior to costs associated with being a public company (approximately £3 million in 2018)

Strong cash flow generation enabled £207 million of new debt portfolio purchases between 30 June 2016 and 30 June 2017 whilst still reducing leverage from 4.6x as of 30 June 2016 to 4.1x as of 30 June 2017

Financial Highlights

The following are the highlights from Cabot’s audited full year results for the financial years ended 31 December 2015 and 2016 and half year results for the six months ended 30 June 2017, and the unaudited half year results for the six months ended 30 June 2016:



Other Cabot financial Information (unaudited):

Cabot intends to publish its third quarter financial results on or around 3 November 2017.

The Company notes that the third quarter has been strong in terms of purchases.

Details of the Offer

Cabot intends to apply for the Company’s Shares to be admitted to listing on the premium segment of the Official List and admitted to trading on the main market of the London Stock Exchange

Shares in the Offer will be offered to certain institutional investors in the UK and elsewhere outside the United States, and in the United States only to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A of the US Securities Act of 1933 (the “Securities Act”), or another exemption from, or in a transaction not subject to, the registration requirements of the Securities Act

The Offer is expected to raise gross primary proceeds to the Company of approximately £195 million to be used for general corporate purposes (which may include repayment of outstanding indebtedness)

The Offer will also provide its major shareholders, Encore and certain funds advised by J.C.

Flowers & Co. (together, the “Major Shareholders”), and certain management shareholders with an opportunity to realise a part of their investment, with such management shareholders selling their shares as part of the Offer, and the Major Shareholders receiving an at-IPO dividend payment that will be funded out of further primary proceeds from the offering

The Company, its Major Shareholders and Directors expect to enter into customary lock-up arrangements with respect to their shareholdings for specified periods of time following Admission

Immediately following Admission of the new Shares, it is expected that the Company will have a free float of at least 25% of the issued ordinary share capital of the Company

A further over-allotment option of up to 15% of the Offer size will be made available by the Major Shareholders

Full details of the Offer will be included in the prospectus expected to be published in the coming weeks

Admission is expected to take place in November 2017, and following Admission, the Company will be eligible for inclusion in the FTSE UK indices

In relation to the Offer and Admission, Goldman Sachs International and Morgan Stanley & Co.

Process of pricing an ipo

International plc are acting as Joint Global Co-ordinators, Joint Bookrunners and Joint Sponsors

Jefferies International Limited and Numis Securities Limited are acting as Joint Bookrunners and Lazard & Co., Limited is acting as Financial Adviser to the Company




Notes to the Editor:

About Cabot

Cabot Credit Management (

Cabot is one of the largest credit management services providers in Europe and the market leader in the UK and Ireland (based on 120 month estimated remaining collections as of 31 December 2016).

Cabot provides a range of credit management services across a broad client base that includes some of the largest credit providers in Europe. These services include debt servicing offerings such as early stage collections, business process outsourcing, contingent collections, trace services and litigation activities.

Cabot has credit management experience across a range of both credit providers (including consumer finance, telecommunications companies, retailers, utilities companies and government agencies) and asset classes (including secured consumer debt, small and medium sized enterprise debt, and high value accounts).

Between Cabot’s inception in 1998 and 30 June 2017, it has invested a combined total of £2.1 billion in the acquisition of over £21 billion in face value of purchased loan portfolios and has received £2.9 billion in cumulative collections from purchased loan portfolios.

As at 30 June 2017, Cabot’s 120 month estimated remaining collections was £2.2 billion, and Cabot’s 180 month estimated remaining collections was £2.5 billion.


With 20 years of debt purchase and debt servicing experience, Cabot was one of the first companies to engage in the credit management services market in the United Kingdom.

In March 2016, Cabot became the first large credit management service company in the United Kingdom to be authorised by the FCA, and in May 2017 Cabot became the first credit management service company in Ireland to be authorised by the Central Bank of Ireland.

Customer service and regulatory compliance are at the core of Cabot’s business and culture and are implemented through its collections strategy.

Cabot seeks to treat its customers fairly and offer affordable payment solutions, often through long term payment plans. Cabot has customer satisfaction scores in excess of the UK Customer Satisfaction Index banking and building society benchmarks and many leading high street banks included in such index, and Cabot believes that it has one of the lowest rates of complaints in the debt collection industry referred to the UK Financial Ombudsman Service.

Cabot has won numerous industry accolades, including a 2017 UK Customer Satisfaction Award from the Institute of Customer Service, the CCR Credit Excellence Awards 2016 for Compliance and the Credit Today Award 2016 for Treating Customers Fairly.


Cabot’s stated vision is to be “The Best at What We Do” – and the Directors believe Cabot has a strong and deliverable strategy to execute.

Discover CCM

Cabot prides itself on being the leading credit management services company in both the UK and Ireland, and strongly believes that this position is underpinned by operational excellence built on years of experience that exceed all other large players in these markets currently.

Its depth and breadth of data assets, leading scorecard abilities and constant willingness to find ways to innovate and meet clients’ needs further allow it to differentiate itself from peers.

Initial Public Offering (IPO) Process

Most fundamentally, however, the interests of customers are at the heart of the business which is reflected in its mission of “Financial Recovery - Helping Each and Every Customer”. The Directors believe that this combination of operational excellence, customer-centric approach and well-considered growth outside of its home market allows them to meet their vision and drive long-term sustainable growth in the business.


Maintain market leadership in the UK and Ireland, delivering superior returns

Preserve Cabot’s market leading position in the UK and Ireland by maintaining its high level of collections performance and compliance

Invest in new innovations such as in digital channels to maintain its reputation for customer service and compliance, and continuing to develop its leading data, scorecard and litigation capabilities

Continue to focus on financial institutions where Cabot has a competitive advantage, and where the financial institutions market provides significant growth potential


Increase the acquisition of deeper data (more data points per individual rather than more individuals) and focus on management of that data

Continue to invest in behavioural science, which is expected to assist in maintaining and enhancing Cabot’s collections performance


As of and for the year ended December 31,


As of and for the six months ended June 30,

(£ in millions)













Collections on purchased loan portfolios







Total revenue







Income from portfolio investments







Servicing revenue







Operating profit








As of and for the year ended December 31,


As of and for the six months ended June 30,

(£ in millions)








Adjusted EBITDA








Adjusted EBITDA margin (%)








Net debt
















84-Month ERC








120-Month ERC








180-Month ERC










Cabot Credit Management Ltd.

Kenneth Stannard, Chief Executive Officer

Craig Buick, Chief Financial Officer

Becky Cimelli, Public Relations Manager

+44 (0) 344 556 0263



Goldman Sachs International

(Joint Global Co-ordinator and Joint Bookrunner)

Richard Cormack

Dirk Lievens

Julien Dyon

James A Kelly

+44 (0) 20 7774 1000

Morgan Stanley

(Joint Global Co-ordinator and Joint Bookrunner)

William Chalmers

Martin Thorneycroft

Ben Grindley

Angus Millar

+44 (0) 20 7425 8000



Jefferies International Limited

(Joint Bookrunner)

Jolyon Luke

Rob Leach

Luca Erpici

+44 (0) 20 7029 8000



Numis Securities Limited

(Joint Bookrunner)

James Taylor

Jamie Loughborough

Akshman Ori

+44 (0) 20 7260 1000



Lazard & Co., Limited

(Financial Adviser to the Company)

Nicholas Millar

Nick Fowler

Daniel Muldoon

+44 (0) 20 7187 2000



Brunswick Group

(PR Adviser to the Company)

Azadeh Varzi

Craig Breheny

Diana Vaughton

+44 (0) 20 7404 5959

Cabot financial ipo prospectus