Fairpoint buys price comparison site

LANCASHIRE IVA arrangement company Fairpoint Group has acquired the price comparison website Moneyextra.com in a deal which could be worth £8m.

The deal is in line with Fairpoint’s strategy to broaden its services and sources of revenue. At present it draws its revenues from managing people’s debts through individual voluntary arrangements (IVAs).

The Chorley-based group, formerly known as Debt Free Direct, said Manchester-based Moneyextra was a pioneer in a fast-growing sector. It was founded in 1995 and is ranked fifth in the market.

Fairpoint paid £1 for the site but will make £1m of working capital available to replace existing borrowings, fund integration and support revenue growth. An earnout of 49% of future earnings is payable to the vendors, Henbury Holdings, registered to an address in Beverley, East Yorkshire. The group expects the deal to cost a total of £8m.

Chris Moat, Fairpoint’s chief executive, said: “The income and expenditure review we undertake with customers gives us a clear insight into where customers can reduce their bills and the addition of Moneyextra to the group provides us with a clear way of delivering savings to customers on a range of product and services.”

In the 19 month period to September 31 Moneyextra recorded an operating loss of £1m on revenue of £3m. On completion Moneyextra is expected to have net assets of £1.1m.

Fairpoint said the operating losses stemmed from low revenue streams failing to cover the fixed cost base of the business. “Current revenue streams have grown and are expected to cover the existing cost base before the benefits of group synergies feed through in 2011 to enhance revenues and leverage management costs”, said the group.

In a trading update, also issued this morning, Fairpoint said it was performing in line with expectations with sales and profits slightly ahead. IVA volumes are up on last year.

A team led by Daniel Liptrott at the Manchester office of law firm Eversheds advised Fairpoint. Pinsent Masons and Ford Campbell acted for the vendors.