A company that has been in news for creating value for global
Portfolio Recovery Associates, Inc.
). The closure of the acquisitions of Norway-based Aktiv Kapital AS
and Individual Voluntary Arrangements (IVA) Master Servicing
Platform is helping the company in this respect. Following these
developments, the stock price increased 5.56% in the last trading
session to close at $60.00.
Portfolio Recovery Associates had announced plans to acquire Aktiv
Kapital in Feb 2014, whereby it stated the total purchase
consideration to be $1.3 billion. This included an equity interest
of $880 million and $435 million worth of corporate debt. To
complete the transaction, Portfolio Recovery utilized its cash,
$170 million of seller financing, $435 million of the company's
revolving credit facility and a $214 million accordion feature on
its credit facility. With the closure of this deal, Aktiv Kapital
will be integrated to PRA Group - the business entity of Portfolio
As per agreement, Aktiv Kapital will retain its name in Europe and
Canada while customers in the U.S. and U.K. will interact with PRA
Group. Meanwhile, Portfolio Recovery will retain its contingency
collection services to its existing U.K. clients in the financial
services, retail, telecom and utility industries.
Coming to the other transaction, Portfolio Recovery entered into an
agreement to acquire the IVA Platform and other operating assets
from Pamplona Capital Management, LLP (PCM) in Feb 2014. As decided
earlier, Portfolio Recovery has appointed PCM's Andrew Berardi as
Managing Director of UK, Insolvency Investment Services, PRA Group
(the new name for global Bankruptcy Services business of Portfolio
The aforementioned transactions will take forward Portfolio
Recovery's international growth objectives. The first takeover will
enable the company to become one of the major acquirers of consumer
debt with around $4.6 billion in estimated remaining collections
The acquisition is also expected to help the company meet its
return on equity (ROE) goal of 20% and earnings per share (EPS)
growth of 15%, going ahead. The second transaction on the other
hand will strengthen Portfolio Recovery's foothold in the U.K.,
thereby helping it to acquire more consumer debts. While Portfolio
Recovery's U.S. operations' contribution to bottom-line results is
commendable, the acquisition of IVA Platform will now help the U.K.
insolvency business to contribute significantly as well.
Currently, Portfolio Recovery has a Zacks Rank #3 (Hold). However,
better-ranked stocks in the financial services space include
Apollo Residential Mortgage, Inc.
American Express Co.
). While Apollo Residential and ORIX sport a Zacks Rank #1 (Strong
Buy), American Express has a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
PORTFOLIO RCVRY (PRAA): Free Stock Analysis
APOLLO RES MTGE (AMTG): Free Stock Analysis
AMER EXPRESS CO (AXP): Free Stock Analysis
ORIX CORP-ADR (IX): Get Free Report
To read this article on Zacks.com click here.