Arrow hits more than €800m for Europe NPLs

Arrow Global Group, a London Stock Exchange-listed purchaser of debt portfolios, has raised €838 million at the first close of its inaugural pan-European non-performing loan fund.

Arrow Credit Opportunities and related entities includes €628.5 million raised in the form of third-party capital commitments from global investors. The fund has an eight-year, closed-ended structure.

In an announcement, the Manchester-based firm said it would seek €2 billion in total assets under management for the fund by the end of 2020. It also pledged to invest either 24.9 percent of eventual fund commitments or €500 million as a co-investor.

Formed in 2005, Arrow specialises in the purchase, collection and servicing of non-performing and non-core assets – mainly secured and unsecured loan and real estate portfolios from and on behalf of banks, institutional fund investors and specialist lenders. It operates across a range of areas, including credit cards, student loans, commercial real estate, motor finance and SMEs.

Arrow is active in five European markets – the UK, Ireland, Portugal, the Netherlands and Italy – and has almost £53 billion ($69 billion; €62 billion) of assets under management. In 2018 its debt investments delivered a net IRR of 17 percent, compared with 15 percent the previous year.

“This fund raise has brought a diverse range of new clients to the Arrow Global Group and we are excited about the opportunity we have to unlock value for this important new client base in our specialist, high return asset classes,” said Zach Lewy, founder and chief investment officer.

The firm said AGG Capital Management, the Jersey-incorporated portfolio manager to the fund, will receive a “market standard” management fee for its services and “have the opportunity to generate additional performance-based returns once certain investment targets are met”. AGG will also receive servicing revenue in return for providing collection services to the fund.

Arrow is headed by group chief executive Lee Rochford, who joined in January 2017 having been chief financial officer at Virgin Money between 2013 and 2015. He was at RBS between 2007 and 2013, including as managing director and head of the financial institutions group.