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Lantern Group nears first-round bids in Ashcombe-led sale – sources

Copper Street Capital is looking to exit its investment in Lantern Group, four sources familiar with the situation said, with first-round bids for the UK debt purchase and recovery company expected in the next fortnight.

Lantern CEO Denise Crossley confirmed the sale when contacted for comment.

“The strategy for the business won’t change as we seek a supportive investor who will enable us to deliver our future plans. All existing client and seller relationships will continue – being key to the future growth and success of the business, alongside the existing management team,” she said.

Corporate finance boutique Ashcombe Advisers is running the process, the sources said. 

The company is expected to post FY22 EBITDA in the GBP 15m region, three of them said.

Ashcombe declined to comment. Copper Street did not return requests for comment.

The auction follows a number of inbound approaches over the last six months, coinciding with the end of Copper Street’s five-year investment horizon, one source said.

Copper Street took a majority stake in the group, formerly known as MMF, after receiving clearance from the UK Financial Conduct Authority (FCA) in September 2017.

Last year, Lantern acquired Sonex Financial, a provider of customer management services to some of the UK’s top energy companies.

Based in West Yorkshire, Lantern purchases loan portfolios to run collections and offers customer management services to corporates. This may pose ESG concerns for investors, while the quality of its book might come under pressure in the event of a recession, a debt fund manager said.

However, the group has expertise in dealing with vulnerable customers, offering support and discounts across long-term plans with no interest or charges added, one source countered, arguing that this sits well with the FCA’s new “Consumer Duty” rules.

Sonex, Lantern’s business process outsourcing (BPO) unit specialised in vulnerable consumers, is particularly attractive, as it expands from the energy and utilities sectors into financial services, one source said.

Meanwhile, hardening economic conditions may unlock opportunities for the group to acquire debt portfolios, another source added.

The credit management market has seen a number of M&A transactions in the past year, including the sale of Hoist Finance’s [STO:HOFI] UK operation to Permira-backed Lowell at SEK 4.5bn (cGBP 370m) EV in April and the GBP 565m takeover of London-listed Arrow Global by TDR Capital, which completed last October.

BC Partners launched a sale process for its French credit management agency iQera in the spring, drawing interest from seasoned non-performing loan (NPL) investors, as reported.