A fast-growing consumer credit management group in the middle of acquisition by a company funded by the global investor that also backed LegalZoom, has launched an alternative business structure (ABS).
Lowell Solicitors Ltd is being spun out of the legal department of Lowell Group, which employs more than 1,200 people.
Lowell comprises two distinct businesses: Lowell Financial, based in Leeds, specialises in investing in defaulted consumer debt portfolios and their recovery, while Fredrickson, based in Surrey, is a debt collection agency.
It received its ABS licence from the Solicitors Regulation Authority (SRA) in July, effective from 1 October. Two weeks after the licence was granted, the group announced it had been acquired by a company backed by private equity firm, Permira.
The plan behind the group’s acquisition is to turn it into a pan-European financial services giant. Lowell is currently being merged with another Permira business, the Germany-based receivables management company GFKL, to create a business servicing Europe’s two largest credit management markets.
The combined group will have over 15m customers and hopes to challenge big-name providers such as Santander, Vodafone, and Barclaycard.
In a statement coinciding with publication of the company’s results in the third quarter of FY2015, Lowell CFO and the ABS’s head of finance and administration, Colin Storrar, said: “We are one of the few businesses in our industry who have applied and received confirmation from the SRA to proceed.
“The company will begin to operate on completion of the change in ownership.”
The ABS’s head of legal practice is solicitor Sara De Tute, who is chief risk officer and legal counsel on Lowell’s executive board. A former president of the Credit Services Association, she spent six years at Eversheds, where she trained. She left to join Irwin Mitchell as an associate in the commercial litigation team.
The SRA noted on the ABS licence that Lowell had been granted a waiver to the separate business rule, but declined to give any detail, adding that it considered “it is not in the public interest to publish any further information regarding this decision for reasons of confidentiality and in all the circumstances the impact of publication would be disproportionate”.
The size of the business behind the ABS dwarfs those of other debt recovery specialist ABSs, including Eversheds spin-off LRC, Castle Keep Law, a spin-off from Harrington Brooks, and Moriarty Law, the debt collection arm of Essex-headquartered firm HKH Kenwright & Cox, based in Ilford.
International private equity group Permira has backed more than 200 businesses since it was founded in 1985. It is currently investing just over 5bn euro (£3.7bn). Companies it backs include website Ancestry.com and shoe manufacturers Dr Martens. At the beginning of last year, it bought more than US$200m (£132m) of the equity of LegalZoom.