|Shares Out. (in M):||311||P/E||12.9||0|
|Market Cap (in $M):||3,425||P/FCF||0||0|
|Net Debt (in $M):||1,300||EBIT||400||0|
|CEO/COB exit clause||40|
|Insider ownership||10 %|
|IFRS P&L 2014 (incl FY Ultimo from '14)||2014||2015|
|Interest income on loan portfolios||727||901|
|External collection (commission, fees)||91||96|
|Portfolio collection income||818||997|
|Total operating revenues||841||1020|
|IFRS writedowns on portfolios||-261||-458|
|Total cash revenue* (add back write-downs)||1102||1478|
|Cash EBITDA** (= cash revenue - opex)||526||883|
|EBITDA (cash EBITDA - writedowns)||265||425|
|Other financial items||29||-|
|Tax (12% from 2015)||-24||-36|
|# shares ( incl all options dilution)||311.4||325.8|
|IPO pricing comparables||T12 P/E||T12 P/B|
|B2 multiples on 2015 EPS/Q1 2015 BV||13.5||2.4|
|B2 share price at avg peer IPO pricing:||20.0||15.8|
incressing analyst coverage
|Entry||09/16/2015 03:21 AM|
Stenshagen Invest, who has put Kjetil Garstad on the board of B2, increased their position by about a million shares in the last weeks/months. They now hold around 20m shares of B2 Holding out of a total of 311m shares.
|Subject||debt collection industry seminar|
|Entry||03/14/2016 11:07 AM|
Carnegie arranged an industry seminar for clients last week. KRUK (B2's closest peer), Intrum Justitia, Arrow and Hoist presented. Highly recommend taking a look if you can.
Reading through the material, it seems like the general outlook for the industry is very promising. The NPL portfolio pipeline seems pretty rich still. There's no telling how long it will last, but it doesn't seem to be much of a stretch to assume growth opportunities are extraordinarily good for a couple of more years at least. B2 also said they are investing aggresively in their latest presentation, which I highly recommend reading.
Estimating earnings for B2 with precision even a couple of years ahead is difficult because of several variables that are difficult to forecast (investments, opex increases, portfolio amortization). I currently estimate EPS for 2017 and 2018 around 1.4 and 1.6 NOK, which leaves B2 trading at less than 10x 2017 earnings. I think a more reasonable valuation is 14x, which would mean a stock price of 19-20 NOK. <10x EPS also looks cheap compared to peers Intrum and Kruk trading at at 14x and 15x 2017 bloomberg consensus earnings respectively.
I remain convinced this is a great investment and it's still our largest position. While the lack of earnings visibility is probably an obstacle in terms of the stock reaching its fair value quickly, the listing on the OSE is now planned for April 2016, which is just around the corner and should increase awareness, analyst coverage and liquidity.
|Subject||Re: Re: IPO set for early june|
|Entry||05/25/2016 04:06 AM|
Hi - I'm not familiar enough with Kruk's purchase to be helpful there, but I will look into it.
The company just published the IPO prospectus this morning on its website. In it there is also an update on recent activity. with regard to low hanging fruit, I think the NPL opportunity in Europe now is still huge. There is some very interesting info on this in the prospectus as well.
|Subject||Re: Re: Re: IPO set for early june|
|Entry||05/25/2016 04:18 AM|
With regard to the Kruk purchase, it is hard tor me to say anything intelligent on the economics of the purchase without knowing much about the quality of the portfolio. But I would say that seeing larger NPL portfolio sales (this one constituted unpaid balances of 597m EUR and was bought from Romanian units of Eurobank for 46m EUR) in Romania is bullish for BTOH (who also just bought a company to use as a growth platform in Romania), it supports the notion that the NPL supply in eastern europe is accelerating.
|Subject||B2Holding ASA - First day of the Offering - applications from primary insiders and lock-up undertak|
|Entry||05/25/2016 05:05 AM|
The following primary insiders of B2Holding applied for Offer Shares at the commencement of the Offer Period: - Jens Harald Henriksen has applied for Offer Shares for a total amount of NOK 250,000; and - Rasmus Hansson has through his related party RMH Invest AS, applied for Offer Shares for a total amount of NOK 500,000. In addition to the primary insiders mentioned above, Stenshagen Invest AS, one of the largest shareholders of B2Holding, has applied for 1 million offer shares and Steel City AS has applied for 200,000 offer shares. Stenshagen Invest AS was until 19 May 2016 represented on the Board of Directors through Kjetil Garstad. Steel City AS is an entity controlled by Kjetil Garstad. As set out in the prospectus and except for shares offered in the Offering, B2Holding, the Company's Board of Directors, shareholders represented on the Board of Directors and the Selling Shareholders are subject to a 6 month lock-up period for the shares currently held by them. The lock-up period for members of the Company's management is 9 months. The lock-up agreements are subject to certain exceptions and may only be waived with the consent of the Joint Bookrunners. The prospectus is, subject to regulatory restrictions in certain jurisdictions, available at www.b2holding.no, www.abgsc.com, www.arcticsec.no and www.nordea.no/b2. Hard copies of the Prospectus may be obtained free of charge at the offices of B2Holding ASA at Stortingsgaten 22, N-0161 Oslo, Norway, or by contacting one of the Joint Bookrunners (defined below). ABG Sundal Collier ASA and Arctic Securities AS are acting as Joint Global Coordinators and Joint Bookrunners in the IPO, and Nordea Markets a part of Nordea Bank Norge ASA, is acting as Joint Bookrunner. Advokatfirmaet Thommessen AS is acting as legal advisor to the Company and Wikborg Rein & Co Advokatfirma DA is acting as legal advisor to the Joint Bookrunners. Investor relations and media contacts Olav Dalen Zahl, Chief Executive Officer, B2Holding ASA +47 909 86 386 J.Harald Henriksen, Chief Financial Officer, B2Holding ASA, +47 913 92 873 Erik Just Johnsen, Chief Group Controller, B2Holding ASA +47 415 77 055
|Subject||Re: Re: IPO set for early june|
|Entry||05/25/2016 05:49 PM|
Recent developments review from prospectus:
11.12 Recent development and change
The information in this chapter is based on internal management accounts and represents the Group’s preliminary assessment of the results for the period from 1 January 2016 to 31 March 2016, and for cash collection and portfolio purchases in the period from 1 April to the date of this Prospectus. The assessments have been prepared by management and have not been reviewed by an auditor, and investors should not rely on them. While the assessments are deemed to be reasonable and management’s best estimate, the actual results can deviate and the differences can be material see Section 4.3 "Cautionary note regarding forward-looking statements".
Cash collections for the three months ended 31 March 2016 of NOK 413 million have been somewhat lower than expected, which has been primarily driven by the Group's secured portfolios in the Balkans and also partly by new laws passed in Poland and Romania. Collections in Sweden, Finland and the Baltics have been in line with the Group’s expectations. In management’s opinion, the lower collections in the Balkans than expected is primarily driven by a delay relative to the forecasted collection curve for portfolios with secured claims, as collections on these will typically be more uneven than purely unsecured portfolios, as the average claim is larger and there is uncertainty with regards to timing for e.g. realization of the underlying security. As the delay in collections is not considered to be an indication of a lower collection potential, management does not expect to record any significant negative portfolio revaluation on an aggregate basis. In Poland and Romania new bailiff regulations have temporarily delayed legal collection.
The Group’s operating expenses are developing in line with management’s expectations, and increasing as collection activities are increased. In the three months ended 31 March 2016 the Group recognised NOK 9 million in non- recurring costs related to the listing process.
As a result of the delay in collections, and the underlying increase in operating expenses, the Group’s EBIT is lower than expectations and in line with EBIT for the three months ended 31 March 2015.
The volume of portfolio purchases in the three months ended 31 March 2016 was significantly higher than for the corresponding period in 2015, and amounted to approximately NOK 448 million (compared to NOK 64 million in the same period in 2015). A significant part of the purchase volume was related to a portfolio purchase of approximately NOK 330 million negotiated during the fourth quarter in 2015 where signing and payment was delayed to January. The Group has also purchased significant volumes on forward flow agreements in Sweden and Finland, which have been higher than management’s expectations. The Group is currently bidding on portfolios with an aggregate estimated purchase price of EUR 400 million, which is significantly higher than at the same period in 2015. The portfolios the Company is currently bidding on also include a significant amount of secured claims, with approximately 50% of the face value related to portfolios that include secured claims.
In the three months ended 31 March 2016 the Group's interest and currency swaps resulted in a net loss of NOK 1.4 million. In the period from 1 April 2016 until 30 April 2016, cash collections amounted to NOK 129 million. Collections in Sweden, Finland and the Baltics are performing well, and as expected the new Bailiff regulations in Poland and Romania still have some delay effect on collection. In the Balkans collection on secured portfolios is still somewhat lower than the forecasted collection curves. During the same period, the Group has acquired portfolios for approximately NOK 69 million. In the period from 1 May 2016 to the date of this Prospectus the Group has entered into a portfolio purchase agreement and expect to enter into an additional portfolio purchase agreement conditional upon obtaining the prior approval from national regulators, such approval is expected by the end of May/early June. The total purchase price for these two portfolios is approximately NOK 630 million, which will be financed through the Revolving Credit Facility.
On 4 May 2016, B2Holding signed a sale and purchase agreement regarding the purchase of Debt Collection Agency AD, a Bulgarian entity. Debt Collection Agency AD is one of the leading players in Bulgaria, with a wholly owned subsidiary in Romania. Debt Collection Agency AD has approximately 134 employees in Bulgaria and 25 employees in Romania. Debt Collection Agency AD is a debt purchaser with collection on owned portfolios, mainly retail unsecured. Debt Collection Agency AD has an ERC of approximately 40 million EUR and the face value of its acquired portfolios is approximately 180 million EUR. In 2015, Debt Collection Agency AD had collection revenues of EUR 5.9 million and net profit of EUR 19.9 million. Through the acquisition of Debt Collection Agency AD, B2Holding will significantly strengthen its position as one of the leading players in the Balkans. B2Holding see Debt Collection Agency AD as an excellent platform for further growth in the region. The purchase price for the acquisition of Debt Collection Agency AD will be financed through the Revolving Credit Facility. Part of the total purchase price will be settled as a cash earn-out based on future results. It is expected that closing of B2Holding's purchase of Debt Collection Agency AD will take place on or about 31 May 2016, subject to certain conditions to closing being met or waived, some of which are outside of the control of the parties themselves.
Other than as described above, there have been no significant changes in the financial or trading position of the Group since the date of the Interim Financial Information.
|Subject||Re: And then Apollo showed up to the party...|
|Entry||06/01/2016 01:25 AM|
Agreed. Still lots do do though. 3.5 Bn is a large chunk of money, but the NPL market in Europe is BIG.
|Subject||Re: Re: IRR|
|Entry||06/03/2016 03:50 AM|
Yes. The company "targets net unlevered IRRs of at least 12%" (Q4 presentation).
|Subject||Re: Re: Re: Re: IRR|
|Entry||06/04/2016 12:05 AM|
Hi and thx for the questions - not sure I have the answers you want. I don't see how it's shocking, Net IRR's haven't been close to the levels you describe for a long time in the industry as far as I can understand. B2 has certainly never talked about that kind of returns. As far as Poland goes, I think that's hard to evaluate beyond what the company communicates, we'll have to see how it plays out.
It seems to me that the company is still growing ERC at a good pace, and given the levg involved, if they can achieve 12%+ net unlevered IRRs, higher if most ofcthe growth will be in the Balkans, and increase leverage to approach a 30% equity ratio this doesn't look bad at all. Please expand on why this is so expensive if you want me to comment further on it.
|Subject||Re: Re: IPO completed|
|Entry||06/13/2016 07:29 AM|
SMG: I'm hoping for 20%+ but depending on how things are going, 15%+ is ok with me. It's our second largest position and we haven't sold anything yet (we bought in at about 6.7 NOK on average).
|Subject||NPL flows in Europe|
|Entry||07/07/2016 03:26 AM|
The amount of NPLs on bank balance sheets in Europe is just staggering. this week we learned that Monte Dei Paschi has been instructed by the ECB to reduce NPLs by another 10 Bn Euros. There's going to be lots to do in Italy and Spain as well. I think fear of IRR pressure in B2H's markets is overdone. The pace of NPL investment is usually lower in Q1, I expect we will get word of significantly higher investments at good projected IRRs from B2 later in the year. We have been buying more shares of B2H on the dip after the IPO.
|Subject||New bond issued|
|Entry||09/20/2016 10:15 AM|
20/09-2016 15:53:13: (B2H) B2Holding ASA: Successfully completed bond issue
B2Holding ASA has successfully completed a EUR 175 million senior unsecured bond issue with maturity in 2021. Settlement date is expected to be 4 October 2016. The proceeds will be used for general corporate purposes. An application will be made for the bonds to be listed on Oslo Børs. Arctic Securities, DNB Markets and Nordea Markets acted as joint lead managers for the bond issue. For further information, please contact: Harald Henriksen Chief Financial Officer, B2Holding ASA +47 913 92 873 Erik Just Johnsen Chief Group Controller, B2Holding ASA +47 415 77 055 This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.
Ekstern link: http://www.newsweb.no/index.jsp?messageId=409839
|Subject||Intrum Justitia and Lindorff to combine. I still think B2H will be acquired. Would be easy for Intru|
|Entry||11/14/2016 03:07 AM|
14/11-2016 07:30:00: (IJ.ST) Intrum Justitia and Lindorff to combine, creating the industry leading provider of credit management services
· Intrum Justitia and Lindorff announce their intention to combine to create the industry leading provider of credit management services ("CMS"). · The combined entity is, through its scale and diversification, ideally positioned to capture the strong market growth in the CMS industry. · The combination is expected to provide material benefits for all stakeholders and create significant shareholder value through annual cost synergies estimated at SEK 0.8bn and significant further revenue synergies. · An agreement has been entered into pursuant to which Intrum Justitia will acquire all the outstanding shares in Lindorff in exchange for newly issued shares in Intrum Justitia. · Intrum Justitia and Lindorff shareholders will own approximately 53% and 47% of the shares, respectively, in the combined entity. Nordic Capital Fund VIII, currently the indirect majority shareholder in Lindorff, will become the largest indirect shareholder in the combined entity. · The transaction is unanimously recommended by the Board of Directors of Intrum Justitia and Lindorff. · The transaction is subject to Intrum Justitia shareholder approval as well as regulatory and competition authority approvals. The transaction is expected to close in the second quarter of 2017.
The combination of Intrum Justitia and Lindorff creates the industry leading CMS company with local presence in 23 markets across Europe and a team of more than 8,000 professional, committed and caring employees. By joining forces, both local and global clients will benefit from a strong pan-European platform, enhanced service offering, innovative solutions and best in class compliance.
|Subject||Re: Intrum Justitia and Lindorff to combine. I still think B2H will be acquired. Would be easy for I|
|Entry||11/14/2016 03:47 AM|
|Subject||Re: Author Exit Recommendation|
|Entry||11/30/2017 09:21 AM|
Stock seems reasonably close to fairly priced given that growth visibility beyond 2018 is limited (at least it is to me).
Sentiment on the stock is very positive, while sentiment with regard to the space more broadly seems to be deteriorating by the day, ref Cabot listing debacle etc etc. I don't believe B2 is engaged in any sort of book cooking or whatever else of a nefarious nature and continue to trust this management team. This is simply a function of having had a good run and looking elsewhere for other opportunities. As usual I'm sure I'm selling too soon (just look at ZAL for one example of my sub-par sell timing).
|Subject||Re: Re: Author Exit Recommendation|
|Entry||11/30/2017 02:46 PM|
did returns on their Baltic stuff ever turn out to be higher than other geographies? I recall that Baltic IRRs were similar to the company average for at least a few quarters, which was disappointing for such a frontier market. thanks
|Subject||Re: Re: Re: Author Exit Recommendation|
|Entry||11/30/2017 05:00 PM|
the company doesn’t break down irr’s by market so hard to say. The only honest answer is we don’t know yet. Also the Baltics aren’t as important markets for B2 as Central and South Eastern Europe (which are supposed to have markedly higher returns than the northern europe segment which includes the baltics).
|Subject||Re: Re: Re: Re: Author Exit Recommendation|
|Entry||12/01/2017 01:15 PM|
sorry, I meant to say "Balkans" not "Baltics" ... I realize they don't disclose IRRs, but I think you can get a rough sense of profitability on these debt portfolios with the info they do provide.
Here's the formula I came up with - it calculates the money-multiple realized in the period (quarter, year, etc.)
= cash collections / cash invested to generate cash collected = cash collections / amortization of purchase price of loan portfolios
= cash received/ (cash collections - interest income on loan portfolios)
this metric typically ranged between 2-3x across geographies and though 2Q16 the Balkans were right in that range ... not above it as one might expect given less competition for bad debt in those countries.