Transaction Capital buys Australia's Recoveries Corporation

Transaction Capital, a South African company, has recently made a bold move into the Australian debt recovery market by acquiring 100% of Australia's Recoveries Corporation for approximately $33 million Australian dollars, with a potential additional $10 million Australian dollars payable subject to profit warranties. David Herwitz, the Chief Executive of Transaction Capital, explained that the decision to acquire Recoveries Corporation was a strategic one, as the company is a perfect fit for Transaction Capital's risk services segment. Recoveries Corporation is the largest collector and buyer of non-performing debt in South Africa, mirroring the same activities in Australia. Furthermore, Recoveries Corporation specializes in collecting on insurance claims and government debt, areas in which Transaction Capital has been looking to expand. The acquisition is seen as a valuable addition to Transaction Capital's portfolio, offering synergies and opportunities for further growth. As Transaction Capital looks to leverage the acquisition of Recoveries Corporation, there are plans to explore various opportunities in the Australian market. One such opportunity is to assist Recoveries Corporation in entering the book buying business in Australia, a market significantly larger than the debt collection services business. Additionally, the Australian debt collection market is fragmented, presenting potential acquisition opportunities for Transaction Capital to consider in the future. However, Herwitz emphasized that any expansion into new markets or acquisitions will be approached cautiously and conservatively. In terms of technology, Herwitz highlighted the importance of data and technology in the debt recovery business. Both Transaction Capital and Recoveries Corporation leverage technology such as dialers and voice analytics to enhance their collection strategies. There is a strong focus on sharing technological insights between the two companies to drive operational efficiencies and improve collection processes. Herwitz expressed optimism about the potential for cross-learning and collaboration in the realm of technology. Despite the challenging economic environment and pressure on consumers, Transaction Capital remains confident in its operational resilience and defensive positioning. While acknowledging the difficulties faced by South African consumers, Herwitz reassured stakeholders that the company is on track to deliver growth in earnings as anticipated. However, he acknowledged the broader market pressures on clients, including retailers and banks, who are actively managing risk amid economic uncertainties. Looking ahead, Transaction Capital is poised for continued growth and strategic expansion, with the acquisition of Recoveries Corporation serving as a key milestone in the company's international ventures. The acquisition not only strengthens Transaction Capital's presence in the Australian market but also presents avenues for further collaboration and innovation in debt recovery and risk services.