Advent International Acquires Majority Stake in ARM Firm GFKL

Frankfurt/Essen – Advent International, the global private equity firm, has signed agreements to acquire a majority stake in GFKL Financial Services AG, a leading independent financial service provider for debt collection and debt purchase in Germany from a consortium of institutional investors. In addition, Advent will participate in a capital increase to strengthen GFKL’s equity base and to realise further growth. The purchase price was not disclosed. The acquisition is subject to closing conditions including merger and regulatory approvals.

Servicing receivables in excess of about ¤23 billion, GFKL is a leading debt collection services provider in Germany. Since 2008, the company, which is headquartered in Essen, has undergone a comprehensive strategic refocusing following the decision to discontinue its leasing and systems business. The focus now is on debt collection and debt purchasing as well as software applications.

GFKL’s debt collection services include both trust administration and the purchase of non-performing receivables. Classes of receivables range from secured real estate receivables to unsecured receivables from consumers’ credits as well as from other sectors such as insurance, mail order and telecommunications. GFKL’s software segment covers applications for the credit and receivables management of banks, savings banks, industries and the public sector; moreover, it includes tailored and standardised applications for the core business of insurance companies.

The debt collection market has strong growth expectations driven by increasing outsourcing levels in many of these sectors. With 700 small to medium-sized debt collection companies and the top three players representing only a 30% market share, the particularly highly fragmented German market offers attractive consolidation opportunities.

Dr. Peter Jaensch, Chief Executive Officer of GFKL Financial Services AG, said: "Over the last twelve months we have adapted the business model of GFKL to deal with the impact of the financial crisis. With Advent we have found a new shareholder who intends to enhance GFKL’s repositioning by providing deep sector expertise as well as financial resources."

Ralf Huep, Managing Partner in Advent International’s Frankfurt office and Co-Head for Europe, said: "We will continue to support GFKL by providing the required capital, as well as the additional sector know how to grow. These two key factors will significantly contribute to strengthening GFKL’s future performance and to reposition the company going forward."

Dr. Christian Stoffel, Head of Advent International’s Financial Services practice in Germany, who led the investment for Advent, adds: "We believe the company’s leading position provides a strong platform for growth and will allow accelerating the expansion of the business through expanding organically as well as through acquisitions."

Juergen Baltes, member of the executive board of GFKL and responsible for the Debt-Collection Non-banking and Software, said: "The acquisition by Advent is indeed an important step to position GFKL in a market set for growth." Dr. Tom Haverkamp, member of the executive board and responsible for debt collection banking and debt purchasing, agrees: "We see Advent as the ideal partner, who is committed to grow the company."

Advent International is one of the leading global investors in financial services having completed investments in 16 financial services companies in the last four years with a combined enterprise value of more than $7.5 billion. This year, Advent has signed two financial services investments, Fifth Third Processing Solutions, the US payments processing business and CETIP, the largest central depository for private fixed-income securities and over-the-counter (OTC) derivatives in Latin America. Further investments include Poland’s leading debt purchase and collection business ULTIMO, Monext and Sophis in France, Quero Quero in Brazil and Domestic and General and Equiniti in the UK.