Pepper Group Announces Sale of European servicing business (PES) to Link Group will not proceed

Pepper to defer PES sale process and focus on strategy to drive growth across European markets

The Board of Pepper Group (“Pepper”) has announced the sale of Pepper European Servicing (PES) to Link Group, first announced in January 2020, will not proceed and that it has decided not to re-instigate the process launched for the sale of PES in 2019.

This follows an announcement from Link Group (“Link”) today to the Australian Securities Exchange (ASX) which stated that the Link Board had not requested an extension to the Sale and Purchase Agreement (SPA) following its expiration on 31 January 2020.

The 2019 process was launched following a number of approaches from parties interested in Pepper’s European loan servicing business, which continues to grow and perform very strongly. PES provides end-to-end loan servicing and asset management across residential and commercial segments, with strong market positions and longstanding customer relationships in the UK, Ireland, Spain, Greece, and Cyprus.

Mike Culhane, CEO of Pepper Group, said: “PES had its strongest year ever in 2020, showing growth in Assets Under Management (AUM), which now stand at over €40 billion, and impressive EBITDA growth across all our jurisdictions. Having strengthened our service capabilities significantly in recent years we are ideally positioned to capitalise on material growth opportunities in all our key European markets, accentuated by the growing need for highly specialised loan servicers to minimise the negative impact Covid-19 related challenges will have on consumers and financial institutions across Europe.”

“Against this backdrop, and having assessed the options, the Board of Pepper Group believes focusing on the ongoing growth of the business in the near future is in the best interest of the business, its people, customers or shareholders.”

In Q3 and Q4 of 2020, PES took on 12 new portfolio mandates, with 8 new clients adding over €5 billion to its assets under management. The business is in the process of boarding these portfolios over the next 3-4 months.

Fraser Gemmell, CEO of Pepper European Servicing, said: “Having completed significant investment in highly sophisticated market-leading servicing platforms in Spain and Ireland and having delivered the strongest financial performance in our history, we have a clear strategy to grow our business materially across all our markets over the next few years. This will include both organic and acquisition-led growth, via targeted growth initiatives and selective use of our balance sheet. We have a great team in place, and I look forward to working with them in the coming months and years to consolidate PES’s position as Europe’s leading pan-European multi-asset servicer, for both performing and non-performing assets.”

The proposed transaction has been in a process with the Competition and Consumer Protection Commission (CCPC) in Ireland since January 2019 and a determination was expected in the coming weeks. As a result of Link’s announcement today, this determination is no longer required.

Pepper Group is a diversified global financial services group with operations across Europe and Australasia with over 1 million customers worldwide.

In addition to its loan servicing business in Europe, Pepper is the owner of a growing lending business, trading under the Pepper Money brand in the United Kingdom and Spain. Pepper is also active in China, India and Japan with servicing business lines and Australia, New Zealand, Hong Kong and China with its lending division.

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