US firm buys up half share in Baycorp

Baycorp, the best known debt collection agency in New Zealand, now has a 50.25pc US owner. Photo / David White

Australasian debt collection agency Baycorp has new majority shareholder.

The company announced today that Nasdaq-listed Encore Capital Group has agreed to purchase a 50.25 per cent stake in the business.

Encore, which also operates in the debt collection space, employs more than 5600 staff worldwide and the Baycorp investment will expand the San Diego-based firm's reach to 13 countries.

Baycorp's existing owners, Oceania Capital Partners and SAS Trustee Capital will stay on as shareholders and retain representation on the board, the company said.

According to its website, Encore - which collected over US$1.6 billion last year - purchases portfolios of consumer debt and "delinquent property tax debt" from banks, credit unions, utility providers and municipalities.

It then partners "with individuals as they repay their obligations and work toward financial recovery".

Encore reported a 39 per cent jump in revenue to US$1.1 billion for the 2014 calendar year.

Net income from continuing operations rose to US$105 million from US$77 million in 2013.

Encore shares have fallen 16 per cent this year and closed down 5.2 per cent at US$37.42 today.

Baycorp has operated in New Zealand since the 1950s and says it has the largest customer default database across Australasia.

The company said Encore's predictive analytics and "decision science" expertise were two of the key drivers of the deal and would help Baycorp gain market share.

"We are excited to gain the benefits from Encore's financial, strategic and operational expertise proven throughout the world, which will help accelerate Baycorp's growth and market-leading position," said Baycorp group chief executive Grant Jorey. "There are strong synergies between our companies - we share the same values with regard to resolving debt respectfully and managing our clients' reputations with care."

Encore chief executive Kenneth Vecchione said the acquisition gave the US firm access to new markets that were showing strong growth and had potential for "consolidation and diversification".