The Director in the Norwegian B2Holding, that bought the second largest collection company in Bulgaria in the summer, talking to “Capital”
What is the place for the Bulgarian business acquisition in your business? How does it fit into the B2Holding activities?
– The core of our business is debt collection and the purchase of bad credit portfolios. We started in the region of the northern Scandinavian countries and then developed into the Baltic republics. We explored various opportunities for expansion in Southeastern Europe and the Western Balkans, with several acquisitions in the region as well as portfolio purchases in Croatia, Serbia, Slovenia and Montenegro. We have acquired the second largest collection company in Poland Ultimo. We have also acquired a large portfolio from Hypo Alpe Adria as well as a portfolio of non-performing mortgage loans in Romania.
Hypo sells a portfolio in Bulgaria, too. Are you interested in it?
– I cannot give an answer because we are a publicly traded company and this type of information can be revealed only in a special way.
And how did the Bulgarian Debt Collection Agency hit your acquisition radar?
– It was a structured sale. The hired consultant on the deal contacted us. As I said, this year was very good for our expansion strategy in Southeast Europe and the search for positions in emerging markets that are in the stage of growth.
What does your analysis of our market show – how better is the return it gives, especially when channeling cheap money from Europe?
– The redeem ability is similar to those in the rest of the Balkan countries. It all depends on the price at which receivables portfolios can be acquired, as well as on the level of competence of the experts in the field. But in general, the level of return is satisfactory.
Do you know if other international players in this business are looking at Bulgaria with the intention to enter this market?
– It is not excluded. It is possible more Scandinavian companies to appear. The country already has German investors in our sector.
And did you end up with the acquisitions in Bulgaria or have the potential for a more serious consolidation of the cases?
– We have acquired the second largest company on the market that has business in Romania as well. We have no plans to consolidate any more at this stage.
Are you planning to reorganize the activities of Debt Collection Agency in any way?
– This is a young but quite well-developed company that does not need any restructuring. Maybe just some fine tuning. We are impressed how many capable people there are in the company not only in Bulgarian but also in the Romanian team. We work very well with Nina Stancheva and Martin Despov (the founders of the company).
What do you expect as results from them?
– We expect them to help implement our strategy to build capacity to collect all kinds of obligations – consumer unsecured, consumer-backed, corporate, debts to small and medium-sized enterprises.
How do you expect the debt market to develop in Bulgaria next year? Are the banks going to be the engine?
– It is obvious that banks have not started very actively to sell portfolios of bad loans. Of course, there was an asset check this summer, we examined some sales and I would have guessed that they would start to offer more activity. Consumer finance companies are the other engine that has so far produced the bulk of receivables that are being used.
What do you expect to offer next year?
– My personal expectation is to offer for sale portfolios with bad loans worth between 500 million and 1 billion Euros.
And what is the capacity of collector companies to purchase such a volume of receivables? What exactly is the question for you?
– We have recently issued 175m Euros in bonds, so to date we have significant investment capacity. However, I cannot tell you how much we can direct to Bulgaria, but we have the ambition to increase our business here considerably.
Who invests in your bonds?
– I have no reference with respect to the investors, but I can tell you who invests in our capital. We were listed in the stock exchange in Oslo in June and our shares were mainly acquired by institutional investors from the Scandinavian countries, Great Britain, the United States and Poland.
Don’t you worry about the legal instability in Bulgaria?
I know this is a problem and the matter was raised by our consultant during the due diligence. But in our business, legal cases now rest on small claims in court where we do not expect to face problems. Unless resolved, this problem would affect us when we start collecting corporate loans with collateral.
Were there any obstacles during the deal process?
– No. The process of approval of the transaction by the BNB was very constructive. We consider the model in Bulgaria, where this business is somehow controlled by a regulatory institution, to be very good. This is a good practice.
Interviewer: Gergana Mihaylova