US private equity firm swoops for Callcredit

A THRIVING Yorkshire credit reference business has been acquired in a multi-million pound deal.

Chicago-based private equity firm GTCR, which owns a number of information services and technology companies, has bought Callcredit in a “significant” deal for an undisclosed sum.

Leeds-based Callcredit, which also provides marketing services and analytics for businesses and consumers, has been owned by Vitruvian Partners since 2009. It says the new deal, which has been rumoured to be worth more than £480m, will help it to secure further significant growth.

“We are looking forward to more years with GTCR. I am extremely pleased that Callcredit is partnering with GTCR. They understand technology and added-value growth. They are very clear in wanting us to continue to succeed by helping our customers thrive in this challenging environment of increasing regulation, rapid technological change, and heightened competition,” Callcredit chief executive John McAndrew told TheBusinessDesk.com.

“At the moment, 95% of our revenue comes from the UK, the other 5% from international markets. So, even though we have 95% of business from the UK and sales this year of £100m, we still only have 11% of the UK market share, so still have a long way to go.

“We have grown well in the UK and have got significant growth potential in the next five to ten years here.

“GTCR are only interested in growth businesses so will be looking for us to win more market share which must be a good thing for our people and for Leeds.”

McAndrew said the business is looking to take more space in its Park Lane site and recruit more people.

He said the business expects to take on another 100 people over the next 12 months and now with its new owners, will want to increase its investment programme.

“GTCR will be enabling us to use investment funds to grow the business,” he said.

Callcredit was launched 14 years ago with three people. Today, it has more than 1,000 members of staff.  60% of the staff are based in the Leeds head office and McAndrew confirmed that some of these new jobs will be based in the city.

Callcredit, which completed the acquisition of software solutions firm Coactiva last month, said it has invested in risk software and wants to continue investing in that side of the business.

Callcredit has a small operation in China and wants to grow this, as well as look at other parts of the world. It also has operations in Japan, Dubai and Lithuania.

“International growth is extremely important but our core focus will continue to be meeting the needs of the UK customers,” McAndrew said.

“This deal is the start of a new race, for us. We have doubled our sales in the last four years and increased our bottom line three-fold. So with new investors and this momentum, we are in a blessed place.

“The deal process started 18 months ago with people coming to the business interested in investing. At one stage we had 15 to 20 people investigating the business.

“But we whittled this down and know that GTCR is the best investor for this business. It was important we found the right investor with the right values for us. They wanted to add value and grow the business and they tick all of the right boxes for us.”

In the last set of results announced by Callcredit in May last year, the group reported full year profits of £17.3m with profits from operations increasing 40% on the previous year and revenues increasing by 25% year on year.

Collin Roche, managing director at GTCR, which since its inception in 1980, has invested more than $10bn in more than 200 companies, said: “We are delighted to partner with John McAndrew and the Callcredit management team. We believe that Callcredit is perfectly positioned to continue its success and growth within the rapidly evolving areas of consumer credit and data analytics, and we look forward to supporting John’s vision of building upon the company’s strong service-oriented culture, innovative and expanding product portfolio, and leading technology infrastructure. Moreover, we believe that GTCR is ideally positioned to back Callcredit and its management team’s success by pursuing opportunities for strategic acquisitions and geographic expansion.”

David Nahama, a founding partner at Vitruvian, added: “We are delighted with the performance and development of Callcredit over the past four years of our ownership with John and the team who have worked hard to position the Company firmly for further development. We wish them every continuing success with the next stage of growth.”

McAndrew said: “We are also extremely grateful for the help and support of Vitruvian Partners over the last four years. Vitruvian has actively supported us to grow the company both organically and through strategic acquisitions as we have implemented our vision for the company, which has helped to ensure that Callcredit is now recognised as an innovative and progressive player in our industry.”

Advisers acting on this transaction on behalf of Callcredit from within the Yorkshire region were Tim Simpson and Ben Peacock of Park Place Corporate Finance (lead advisors to the management shareholders).

The Leeds-based advisory firm has advised the management of Callcredit since they bought the business from Skipton Building Society backed by Vitruvian.

Paul Mann/Jonathan Jones of Squire Sanders (legal advisor to the shareholders); Yunus Seedat/Susie Siddall of Addleshaw Goddard (legal advisor to the management team); John Hughes/Chris Barnes of KPMG (Transaction Services) were also involved.