Global Aspirations: International and Cross-Border ARM M&A Activity Gains Momentum

The Canadian contingency collection market is mature, about 1/10 the size of the U.S., and dominated by half a dozen well-established players, Ginsberg says. Debt purchasing is still relatively small in Canada as the large issuers for the most part are not yet selling. “Growth for Canadian agencies,” he adds, “will come from stealing market share on the contingency side from competitors, the opening up of the debt sales market, or by expanding into the U.S.”

South of the Border

NCO, with its Panamanian acquisition, is not the only player to make a recent purchase in the region. Mexico holds promise for industry veteran Juan Blanco, president of International Risk Management in Las Vegas. In December, the former West Asset Management executive and co-founder of National Asset Management announced he had acquired West’s call center in Guadalajara, Mexico – a center he established several years ago. Why would West want to sell? “I think it was a small operation for them,” Blanco says. “They have operations in Jamaica, the Philippines, and India.” According to Tye Hanna, an industry consultant and former executive vice president of West Asset Management, the center was a small legacy operation West inherited when it acquired Worldwide Asset Management. The center handled some call-backs to Spanish speakers in the U.S., but was used mainly to service debt Worldwide purchased in Mexico, a market that has since become intensely competitive. Blanco says he wants to refocus the operation on inbound calls to Spanish- and English-speaking Hispanics in the U.S. Many Americans of Mexican descent speak no Spanish, he points out. For that reason the employees he hires are bilingual. With Hispanics the fastest growing segment of the U.S. population, Blanco sees a huge potential. In the past, the service was only used internally, but Blanco is now marketing it to creditors and debt buyers alike.

The overall call center business in Latin America is growing phenomenally, says Phillip Peters, CEO of Zagada Markets, a boutique business development and analytics firm. According to Peters, in the Caribbean the annual center growth rate is about 100 percent; in Central America, between 30 percent and 35 percent; in Argentina and Mexico, 25-28 percent and 17 percent respectively. Growth, he says, is coming from centers expanding their capacity and new centers being established.

For call-backs to the U.S., Hanna points out, near-shore locales like the Caribbean have the advantage of lower cost centers that are not too far away. However, there’s not a lot of consumer credit there, he points out, and consequently not a lot of demand for in-country calling.

Australia and Asia

The Australian market has seen a bit of what insiders call “rationalization,” including domestic M&A transactions and sales of partial holdings this past year. Credit Corp acquired Pioneer Credit Management Services; Repcol acquired debt buyer Javelin; and Trans Tasman Collection, with backing from investment partners, took over Baycorp Advantage Collection Services. Trans Tasman also boosted its stake in Collection House to more than 10 percent by acquiring shares from co-founder John Pearce days after another co-founder sold more than 6.75 million shares. In February, Collection House also divested itself of non-core asset Rapid Ratings to Howland Partners, a U.S. merchant banking firm.