Solihull-based Secure Trust Bank (STB) has acquired the businesses of a debt collection group for a six-figure sum in a deal advised by the Birmingham office of law firm DLA Piper.
The bank has taken over Debt Managers Holdings Ltd, Debt Managers (AB) Ltd and Debt Managers Ltd.
Debt Managers collects delinquent debt on behalf of a range of clients, including banks and utility companies and is based in Rotherham with 76 staff in total.
STB has recruited Nick Shepherd, the former chief executive of Close Credit Management to run the business.
The acquisition is expected to broaden the income base of the bank without the requirement for large amounts of capital, STB told the Stock Exchange.
An initial sum of £364,000 has been paid on completion of the transaction, which includes payment for the estimated book value of the net assets of £14,000.
In addition deferred consideration of up to £400,000 in cash is payable by STB one year after completion subject certain income criteria. The assets acquired are expected to be fair valued at circa £760,000 after completion.
STB chief executive Paul Lynam said: “We expect the new management to grow the business organically as many larger banks and finance companies deleverage and refocus.
“We also expect this acquisition to make a meaningful contribution to the financial results of STB over a three-to-five-year horizon. This is consistent with our on-going strategy of growing both lending and fee-based income streams within the Secure Trust Bank group.”
STB acquired Debt Managers from its founders, Hugh and Moira Love, who will retire from the business. Debt Managers generated an unaudited loss before tax of £100,000 for the year ended 31 August 2012.
Mark Beardmore, managing partner for DLA Piper’s Birmingham office, and Emily Allen, corporate associate, were the lead external legal advisers to STB on the deal.
In a separate trading statement to the Stock Exchange this morning (16 January), Secure Trust said that profitable trading coupled with the successful equity placing in the fourth quarter resulted in the bank ending the year with robust capital and funding positions.
“STB enters 2013 in a strong and confident position and will continue to call on the government and the regulators to do more to enable challenger banks, such as itself, to compete on a like-for-like basis with the larger, state supported and subsidised banks,” it said.
