San Diego Business Journal

Encore Capital Taking Controlling Interest in 2 International Companies

By SDBJ Staff Wednesday, February 26, 2014

Encore Capital Group Inc., a specialty finance company, has taken a controlling stake in a Latin American company and has agreed to do the same with one in the U.K.

San Diego-based Encore (Nasdaq: ECPG) identified the Latin American company as Refinancia, a leading debt buyer in Colombia and Peru. Encore bought 51 percent of the company in December 2013.

Encore’s acquisition of Refinancia establishes Encore’s presence in the high-growth Colombian and Peruvian markets, which together have nearly 80 million residents.

Refinancia services distressed consumer debt, which it either buys or services on behalf of others. It also offers merchant guarantee services, factoring arrangements and a small credit card business in Colombia.

“This transaction opens up two new markets in which Encore can deploy capital at higher returns than are available in the U.S.,” said Ken Vecchione, CEO of Encore. “In addition, Encore now has a beachhead in Latin America from which to expand, both geographically and into new specialty financial products designed for underserved consumers.”

Meanwhile, Encore said it entered into an agreement to take a controlling stake in Grove Capital Management, an investment group that buys credit portfolios and has a focus on U.K. insolvencies and Spanish assets.

According to Encore, the Grove transaction will broaden Encore’s presence in the U.K. and enable it to bring a full range of offerings to issuers in the U.K. market. Grove’s largest business is buying and managing insolvencies, consisting primarily of individual voluntary arrangements, or IVAs, and bankruptcy receivables. An IVA is a formal, voluntary repayment plan negotiated with creditors and entered into by individuals or businesses that wish to avoid bankruptcy.

“We believe this transaction, along with our other recent acquisitions, provides us with increased optionality by enabling us to allocate capital in multiple asset classes in multiple geographies, to bring our shareholders the best returns,” Vecchione said.

In February, Encore announced the acquisition of Marlin Financial Group.