Ann: Acquisition of Radio Rentals assets - Completion, page-2

The Radio Rentals client base has a subset of its client demographic a population that has tended not to have a borrowing facility from banks, but they are very reliable payers. Middle-aged Aboriginal females, for one. Consequently, buying “the book” is unlikely to occasion less than CCP's target rate of return, which in concept is like CCP buying PDLs of equivalent value, and a repeat of the opportunistic purchase of the books of NCML, Baycorp and Collection House.

Often there is a bonus. NCML had a secure collections facility in Adelaide that was qualified to collect Government debt, an embryonic collections-as-a-service business that when morphed with Baycorp's larger collections-as-service business to create a business that, although relatively small, is at least large enough to be mentioned in Annual Reports.

Apart from the above-mentioned advantage of beefing up collections-as-a-service, the relationships that Baycorp had with banks in NZ facilitated CCP's PDL purchases there – a minor, but novel, expansion for CCP. Baycorp also had Collections facilities and staff in Australia, NZ and the Philippines, which has strengthened CCP's ability to collect.

I cannot say if the Collection House deal had a bonus, or not, beyond acquiring PDLs at a time when, no thanks to Covid, PDL supply had declined. It did however, cement the status of CCP as the place where stressed companies like Thorn Group Australia (TGA), Baycorp and Collection House can cut a fair deal. NCML and Radio Rentals both belonged to TGA.

I am still waiting for that sockdologer deal to pop to the fore in the USA that takes CCP into the ASX Top 100.