UK Fund Manager in Possible $200 million Deal for Collection Agency

Hermes, the pension fund manager, is to buy Wescot Credit Services after entering into exclusive discussions to acquire the debt-collection agency for about £110 million ($198.4 million).

Gordon Pollock, founder of Wescot, who stands to make about £95 million from the sale, picked Hermes?s private equity unit as his preferred bidder last week and is expected to agree a sale within the next few weeks.

Hermes has fought off competition from a shortlist of private equity firms comprising Alchemy Partners, 3i Group, Electra Partners Europe, Legal & General Ventures and Summit Partners. Mr Pollock, a former police constable, set up Wescot in Ayr, in the early 1970s using his personal savings. The company started out as a standard debt collection agency, retrieving outstanding loans for clients, but has diversified by buying debts and collecting money for itself.

Wescot made a pre-tax profit of £10.4 million $18.75 million) on £46 million ($82.9 million) of sales last year. Their clients include Scottish Power, British Telecom, Barclays, Halifax and Thames Water.

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