SAV Credit, a UK credit card issuer, is on the lookout
for its third acquisition in three years – months after it bought
£835m in receivables from Citi’s UK business. SAV has also
assembled a heavyweight management team ahead of its next
acquisition. Sarah Fitzmaurice reports.
Go deeper with GlobalData
Specialist card lender SAV Credit
wants to further expand its share of the UK lending market,
actively looking to secure a deal worth at least £835m ($1.3bn) in
receivables.
James Corcoran, chief executive
officer of SAV Credit, said the lender is currently looking into
deals which will continue the company’s rapid expansion of recent
years.
In March 2010 the company acquired
a portfolio of Citi-branded credit cards, which saw the lender take
on over half a million credit card customer accounts, bringing the
company’s loan book to well in excess of £1bn. Despite migration of
the Citi portfolio not likely to be fully completed until the end
of this year, SAV is looking to complete a similar size deal in the
near future.
“The Citi acquisition was large and
we acquired receivables of £800m,” Corcoran said. “I would love to
do a deal that size and bigger. We are actively looking.”
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By GlobalDataAn industry expert said Bank of
America’s MBNA business in the UK is the only remaining business in
the country which would fit SAV’s requirements.
“MBNA has a considerable prime and
subprime cards in their portfolio that could be available,” said
the source.
“There are not too many portfolios
of a size larger than Citi’s that would be up for sale in the UK.
Bank of America were looking to sell MBNA in October last year and
that business would fit the remit of SAV’s requirements.”
Another industry expert added:
“Other players like HSBC and CapitalOne have invested a significant
amount in cleaning up their books and improving the risk profile of
their portfolios. I would doubt that these were for sale.”
Any acquisition would allow SAV
Credit to continue its expansion and confirm its position as a
leading player in the UK credit card market. The business was
originally known as a subprime lender when it was set up. Recent
acquisitions from both HSBC and Citi have seen it move closer to
the near-prime market.
Established in 2001, SAV Credit
acquired the Marbles credit card business from HSBC in October
2007, adding to its Aqua credit card. The Citi deal in 2010 has
meant the company now has more than 1m customers.
Concoran describes the company’s
general growth strategy as “organic”. He said the business had
played to market conditions by offering credit to customers at a
time when many UK banks have been withdrawing lines of credit.
“We have grown organically but we
have also taken the opportunity of market forces,” said
Concoran.
“We have seen an increased demand
in applications and this has meant we see ourselves as a
‘near-prime’ lender. We have created a demand for a higher quality
of customer for our products.”
Yet despite an increase in
application numbers and a growth in market share, SAV remains
cautious.
“While there is clear market
demand, we are being very selective and conservative with regards
to our risk selection,” Corcoran added.
As SAV’s portfolio has expanded, so
too has its executive team.
In August of this year Brian Loehr
was appointed as managing director ahead of the plans for future
growth. Loehr held senior roles with Lloyds Banking Group,
Barclaycard and Citigroup and followed Sir Malcolm Williamson, who
joined the company as non-executive chairman, in June. Sir
Williamson was the former group chief executive of Standard
Chartered Bank and president and CEO of Visa International.
Concoran joined the company in
February 2009, allowing Richard Langstaff, who set up the company,
to move to the role of president. Concoran, formerly president of
retail banking at failed US institution Washington Mutual, has held
positions at HBOS, Bank’s One and American Express.
Concoran believes the wealth of
knowledge and experience at SAV coupled with their relationship
with financial backers are key drivers to the company’s
success.
“We have a proven formula for how
we do these deals. We have made some terrific additions to the
board recently and we have an executive team with tons of
experience,” Concoran said.
“The relationship with our partners
and investors is strong and there is a very good feeling about
where we are at the moment and we are well positioned to take
advantage of market conditions.”
The credit card issuer is also due
to make an additional hire in the general counsel and compliance
area. The identity of the new executive member is yet to be
announced.
SAV also has a number of private equity backers including:
Palamon Capital Partners; Electra Private Equity; Morgan Stanley
Alternative Investment Partners; and new investor Värde
Partners.
