Silverfleet Capital

Link Financial

Business overview

Link Financial purchases and collects charged-off credit card receivables. These portfolios of credit card receivables are typically sold by the major credit card companies and consist of amounts owed by customers that are overdue to varying degrees. The collection of these debts is a time intensive activity and requires dedicated systems and personnel, and as such it is considered non-core by many credit card companies.

Investment rationale

At the point of our investment in 2000, the market for credit card receivables was at an early stage in its development; yet as the level of credit card debt was growing rapidly, the potential size of the market was considerable.

Value creation

During the course of our investment, the business grew from a fledgling operation to one of the leading purchasers of charged-off credit card receivables. As the UK marketplace became increasingly crowded, and Link’s ‘first mover advantage’ lessened, we supported management’s ambition to internationalise the business, and in 2004 Link opened its first overseas office in Madrid.

Outcome

Following a period of rapid growth, in 2005 we initiated a limited auction and successfully realised our investment, generating a strong return for our investors.