Arrow Global consortium buys Student Loan debt of £900m for £160m

[Legal Beagles]

Sale of student loans knocks £160m off government debt Consortium buys student loan book with a face value of £890m for £160m, but the majority of the loans are in arrears or deferred via Sale of student loans knocks £160m off government debt | Business | theguardian.com.

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[Amethyst]

Re: Sale of student loans knocks £160m off government debt | Business | theguardian.c

Erudio Student Loans is backed by a consortium led by CarVal Investors and Arrow Global Limited who are experts in consumer debt management.

https://www.gov.uk/government/news/s...book-completed

The government has announced the sale of outstanding student loans owed by around a quarter of a million borrowers for £160 million.
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The government has today (25 November 2013) announced the sale of outstanding student loans owed by around a quarter of a million borrowers for £160 million. The sale relates to the remaining 17% of mortgage style (MS) loans taken out by students who began courses between 1990 and 1998.

Erudio Student Loans was selected as the successful bidder through a competitive process. Its offer was judged to represent the best value for money for the tax payer and the price paid exceeds the estimated value to the government of retaining the loans. The private sector is thought best placed to collect the outstanding debt, allowing the Student Loans Company (SLC) to concentrate on administering newer loans.

There is no need for borrowers to take any action and their terms and conditions will not be affected by the sale. The SLC will continue to manage the book until the loans are transferred to Erudio Student Loans in a few months time.

Universities and Science Minister David Willetts said:

The sale of the remaining mortgage style student loan book represents good value for money, helping to reduce public sector net debt by £160 million. The private sector is well placed to maximise returns from the book which has a deteriorating value.

The sale will allow the Student Loans Company to focus on supplying loans to current students and collecting repayments on newer loans. Borrowers will remain protected and there will be no change to their terms and conditions, including the calculation of interest rates for loans.

Erudio Student Loans is backed by a consortium led by CarVal Investors and Arrow Global Limited who are experts in consumer debt management.

There were 2 previous sales of MS loans in 1998 and 1999 which passed £2 billion of the loans to the private sector. Approximately 1 million borrowers were retained by the SLC following the previous sales and 69% of those have fully repaid their debt. The government has already received £2.9 billion of repayments.

Of the loans sold, approximately 46% are earning below the repayment threshold; 14% of borrowers are still repaying and 40% are not repaying their loans in accordance with their terms.

Speaking on behalf of Erudio Student Loans, Stuart Lammin, Managing Director of CarVal Investors said:

CarVal Investors, along with Arrow Global, is pleased to finalise the acquisition of student loans from the Student Loans Company and the government. We look forward to working with Erudio Student Loans to service these accounts given the consortium’s long-term experience in education finance and track record for delivering a high level of service to its customers.

Erudio Student Loans will have to adhere to strict Office of Fair Trading (OFT) guidance about the treatment of borrowers which includes particular protections for vulnerable borrowers and those in financial difficulty. They have also committed to adhering to best-practice guidance issued by the Credit Services Association.

Borrowers who have taken out Income Contingent Repayment (ICR) loans after 1998 will not be affected by this sale. These accounts will continue to be managed by the SLC. The government is in the process of exploring options for the potential future sale of the ICR loan book.
Notes to editor:

Mortgage-style loans were available to eligible higher education students who were enrolled between 1990 and 1998. Borrowers are required to repay in fixed monthly instalments over a set period of 5 or 7 years. Interest is charged at a rate equivalent to the Retail Prices Index (RPI). Repayments can be deferred for a year at a time if a borrower’s income is below the threshold, which is 85% of the national average earnings. Since 1 September 2013 the threshold is £28,775.

Erudio Student Loans is backed by a consortium led by CarVal Investors and Arrow Global Limited. CarVal Investors is an investment fund manager and is 1 of the largest purchasers of consumer loans in the UK market. For further information visit, www.carvalinvestors.com. Arrow Global is 1 of Europe’s largest providers of debt purchase and receivables management solutions. It currently manages over £8 billion worth of consumer debt, by face value, in Europe. It has operated in the UK since 2005 and is listed on the London Stock Exchange. For further information, visit, www.arrowglobal.net.

As well as the Department for Business, Innovation and Skills (in respect of loans to English and Welsh borrowers), the Scottish Government and the Department for Employment and Learning in Northern Ireland are also parties to the sale in respect of loans to Scottish and Northern Irish borrowers.

As a result of a competitive bidding process; Erudio Student Loans has agreed to pay £160 million for the portfolio of loans. The terms of the sale transfers the financial risks associated with loan repayments to the purchaser. Any impacts on the public finances will be decided by the Office for National Statistics, however we would expect there to be a reduction of Public Sector Net Debt (PSND).

There were 2 previous sales of MS loans in 1998 and 1999 which passed a large proportion of MS loans to the private sector. The portfolio in this sale contains the remaining loans whose value is deteriorating with age. Most borrowers repaying their loans on schedule should have fully repaid by now according to the original loan terms. The SLC has successfully ensured that 69% of the approximately 1 million borrowers retained after previous sales have repaid in full by collecting £2.9 billion in repayments. The vast majority of the remaining loans that have now been sold belong to borrowers who are currently not meeting their obligations under the terms of the loan agreement, or who are earning below the deferment threshold and so at present have no obligation to repay under the terms of the loans.

The loans offered for sale during this process have a face value of around £890 million. For details of the sale see previous announcements.

Borrowers’ terms and conditions will not change as a result of the sale. Borrowers will continue to be able to defer repayment of their loan if they are under the income threshold provided they have previously met their obligations under the terms of the loan agreement, and similarly will still have their loans cancelled if they meet the criteria set out in legislation.

The Student Loans Company will continue to administer borrowers’ loans for the time being and borrowers’ existing arrangements for repayment will remain in place. There is no need for borrowers to take any action in relation to their loans at this time. All borrowers will be contacted within the next few months by the Student Loans Company and Erudio Student Loans to inform them of the transfer of their loans and any action they may need to take as a result.

Only mortgage style loans available to those enrolled at university between 1990 and 1998 are being included in this sale. Income contingent repayment (ICR) loans, offered to students after 1998, are not being included in this sale and will continue to be managed by the Student Loans Company. Borrowers who solely hold ICR loans, including current students, will not be affected by this sale.

The Department for Business, Innovation and Skills has been advised on the transaction by PricewaterhouseCoopers (financial adviser) and Herbert Smith Freehills (legal adviser).

The government’s economic policy objective is to achieve ‘strong, sustainable and balanced growth that is more evenly shared across the country and between industries’. It set 4 ambitions in the ‘Plan for Growth’, published at Budget 2011:

to create the most competitive tax system in the G20
to make the UK the best place in Europe to start, finance and grow a business
to encourage investment and exports as a route to a more balanced economy
to create a more educated workforce that is the most flexible in Europe

Work is underway across government to achieve these ambitions, including progress on more than 250 measures as part of the Growth Review. Developing an Industrial Strategy gives new impetus to this work by providing businesses, investors and the public with more clarity about the long-term direction in which the government wants the economy to travel

[wales01man]

Re: Arrow Global consortium buys Student Loan debt of £900m for £160m

Be ready for an influx of students with these loans coming to LB

[Amethyst]

Re: Arrow Global consortium buys Student Loan debt of £900m for £160m

hmmmmmm.

Erudio Student Loans will have to adhere to strict Office of Fair Trading (OFT) guidance about the treatment of borrowers which includes particular protections for vulnerable borrowers and those in financial difficulty. They have also committed to adhering to best-practice guidance issued by the Credit Services Association.

and I'm a monkey's uncle.

[charitynjw]

Re: Arrow Global consortium buys Student Loan debt of £900m for £160m

Be ready for an influx of students with these loans coming to LB

Hopefully, plenty of law students who could help fight the good fight!

[charitynjw]

Re: Arrow Global consortium buys Student Loan debt of £900m for £160m

hmmmmmm.


and I'm a monkey's uncle.

:tape2:

[wales01man]

Re: Arrow Global consortium buys Student Loan debt of £900m for £160m

Are you saying they wont abide by the rules?
A DCA DOING THAT SURELY NOT

[Nibbler]

Re: Arrow Global consortium buys Student Loan debt of £900m for £160m

Some of mine were sold on to Thesis Servicing which is part of Link Financial.

Now we know that Link are a complete bunch of ****s in their normal role, but they have been fine with these for me as Thesis. Maybe the same differential will apply in this case?

(not holding my breath though.....)

[Amethyst]

Re: Arrow Global consortium buys Student Loan debt of £900m for £160m

08605918 ERUDIO STUDENT LOANS LIMITED
DIRECTOR: FILER, MARK HOWARD MR
DIRECTOR: WILMINGTON TRUST SP SERVICES (LONDON) LIMITED




PR from Arrow

Government sells student loans to CarVal Investors and Arrow Global
Published on 25/11/2013

CarVal Investors and Arrow Global (the "Consortium") have announced that they have been selected by the Government as the successful bidder for the sale of student loans owed by around a quarter of a million borrowers.

The sale was completed today, delivering £160 million of aggregate consideration to the Government. This is the first time since 1999 that the Government has completed a sale of mortgage style student loans to the private sector. This follows previous sales in 1998 and 1999.

CarVal Investors and Arrow Global have purchased the loans which were previously managed by the Student Loans Company, via Erudio Student Loans, an investment trustee. The Consortium was selected through a competitive process and was judged by the Government to represent the best value overall.

CarVal Investors and Arrow Global will work with its partners to ensure that students and the Student Loans Company receive an effective service from Erudio Student Loans.

Speaking on behalf of Erudio Student Loans, Stuart Lammin, Managing Director of CarVal Investors, said:

"CarVal Investors, along with Arrow Global, is pleased to finalise the acquisition of student loans from the Student Loans Company and the Government. We look forward to working with Erudio Student Loans to service these accounts given the consortium's long-term experience in education finance and track record for delivering a high level of service to its customers."

Tom Drury, Chief Executive of Arrow Global, said:

"We are delighted to be named by the Government as the successful bidder in this student loans sale. This is an important step for Arrow Global towards delivering this year's financial goals and setting the business up for growth in future years.

"Arrow Global is committed to Treating Customers Fairly principles and we look forward to working with our partners to deliver an effective and seamless service to borrowers."

The terms and conditions for borrowers will not be affected by the sale and individuals do not need to take any action. The Student Loans Company will continue to manage the book until the loans are transferred to Erudio Student Loans in the New Year.

Notes to editors

For further information about the transaction:
https://www.gov.uk/government/news/g...dent-loan-book

Erudio Student Loans is backed by a consortium led by CarVal Investors and Arrow Global Limited.
About CarVal Investors
CarVal Investors is a leading global alternative investment fund manager focused on distressed and credit-intensive assets and market inefficiencies. Since 1987, CarVal Investors has been an active purchaser of consumer, residential and commercial loan portfolios, investing more than £5 billion in global loan portfolio transactions. Since 2011, the firm has acquired loans with around $2 billion in face value in the U.S. and Western Europe. Today, CarVal Investors has over £5 billion in assets under management in both credit and commercial real estate strategies.
About Arrow Global Limited
Arrow Global is one of Europe's largest and fastest growing providers of debt purchase and receivables management solutions with £8.6 billion of receivables under management measured by face value. The group manages over five million customer accounts and has experience of working with student loans. Arrow Global is fully committed to working with customers to ensure that wherever possible each loan is serviced in accordance with that customer's personal circumstances. Through directorships on industry bodies such as the Credit Services Association and the Debt Buyers and Sellers Group, the executive team plays a key role in initiating, shaping and implementing industry compliance standards and programmes. In October 2013, Arrow Global listed on the London Stock Exchange (ARW). For further information about the company visit, www.arrowglobal.net.
There is no need for borrowers to take any action. Their terms and conditions will not be affected by the sale. The Student Loans Company will continue to manage the book until the loans are transferred to Erudio Student Loans in a few months time.
There have only been two previous sales of mortgage style loans in 1998 and 1999 which passed £2 billion of the loans to the private sector.
Mortgage-style loans were available to eligible higher education students who were enrolled between 1990 and 1998. Borrowers are required to repay in fixed monthly instalments over a set period of five or seven years. Interest is charged at a rate equivalent to the Retail Prices Index (RPI). Repayments can be deferred for a year at a time if a borrower's income is below the threshold, which is 85 per cent of the national average earnings. Since 1 September 2013 the threshold is £28,775.

[enaid]

Re: Arrow Global consortium buys Student Loan debt of £900m for £160m

Think I will hold back on comments till the letters start popping through folks letter boxes, probably at the same time as their credit card bills for their Christmas spending pops through too, February 2014 .