Premium Credit Limited: Transforming An Underachieving Company By Leveraging Resourceful Domain Expertise and Strong Leadership
April 12, 2016
GTCR’s Leaders Strategy™ acquisition of Premium Credit Limited (PCL) illustrates how the firm partners with experienced executives to proactively identify and execute transformative acquisitions. PCL was an attractive business in the insurance payment finance industry, but had suffered from underinvestment and lack of leadership as an orphan subsidiary under corporate ownership.
GTCR’s relationship with PCL began in 2010 when the firm was pursuing investment opportunities in the specialty finance and payment areas with a leading financial services executive. GTCR and the executive reviewed the opportunity to acquire PCL, then a UK-based subsidiary of Bank of America, but were unable to arrange a satisfactory transaction with the seller. The opportunity seemingly passed and the executive subsequently assumed a senior role at a major global bank. Persistent and undeterred, GTCR continued exploring transaction options with Bank of America. And in early 2012, GTCR’s efforts were realized, as Bank of America and GTCR agreed on terms of a transaction.
Concurrent with GTCR’s efforts to acquire PCL, the firm’s networking activities led to a meeting in 2011 with Andrew Doman, the former CEO of Russell Investments and an experienced financial services executive. Discussions with Mr. Doman highlighted his skills as a leader and his fit with a potential PCL acquisition. Working together, Mr. Doman and GTCR refined the investment thesis for the PCL acquisition and formulated the strategy for funding the acquisition and carving out the business from Bank of America.
GTCR and Mr. Doman worked over a period of many months to secure debt funding for the transaction through an innovative asset-backed funding facility. The required funding structure was complex, with five major European banks participating, despite challenging market conditions in the midst of the European debt crisis. After seven months of efforts, GTCR and Mr. Doman succeeded in finalizing funding arrangements in October 2012, and the transaction closed. GTCR and Mr. Doman, along with incumbent managers of the company, set about executing the carve-out from the seller while initiating planned business improvements.
Specifically, the company enhanced its sales focus and service offerings, enabling PCL to deepen its relationships with existing channel partners and to add several new channel partners. GTCR underwrote significant investments in enhanced technology to improve service delivery and efficiency. GTCR was also able to improve the funding facility, resulting in materially lower funding costs. Ultimately, after the successful carve-out and intense transformation of the business, revenues and profits grew significantly. The company also became a more strategically important participant in UK specialty finance.
As PCL grew and continued to demonstrate strong financial performance, the company became better known and understood in the financial community. GTCR received attractive offers for its ownership position in PCL and sold its interest in PCL in early 2015. The Leaders Strategy™ acquisition and ultimate sale of a complex corporate carve-out illustrates how GTCR’s resourcefulness and commitment to working with exceptional management partners can transform an under-performing business and bring about financial success.