Debt business power play

WHILE most businesses are suffering in the difficult economic times, debt collectors are flush with funds and seeking out investment and merger opportunities to cement themselves in the marketplace.

Australian Collectors Assocation national president David Cains said many firms were being taken over at inflated prices by the “heavies” which wanted to use Australia and Perth as a springboard into Asia.

The increasing use of high cost technology is also driving cons-olidation.

More than 30 agencies across Australia have lost their in-dependence in the past two years, with more consolidation and related stock market listings expected. Since last year the number of debt collection agencies has shrunk significantly.

More than 500 debt collection agencies operate in Australia with 70 in WA, but the four largest companies control more than 50 per cent of the $250 million a year market.

RMG, which handles 20 per cent of all debt collection services in New Zealand and Australia, has emerged as the largest player following the merger in June last year of more than 20 debt collection agencies with a com-bined annual revenue of $57.5 million.

Baycorp Holdings and Data Advantage are merging to form new powerhouse firm Baycorp-Advantage, while Collection House and Dun & Bradstreet round off the largest players in the Australia/New Zealand market.

Dun & Bradstreet’s Australian and New Zealand operations recently announced a management buyout of its local operations with a view to follow the other big players to a public listing by 2004.

Locally, Repcol, incorporated by Peter Di Prinzio in 1973, is understood to be considering a public listing after a rapid national expansion.

RMG director Mark Street said only about five WA firms would have more than 15 people on staff, while the rest operate in small niche markets with just one or two clients.

Mr Street said technology was catching up with the industry.

“The industry is getting smarter. We have increased our call rates from 15 calls an hour to 30 an hour. That kind of technology is not cheap and that is where the benefits of consolidation are,” he said.

But Mr Cains said there were still niche markets, which the larger firms did not want to take on. He sees growth at the bottom end of the market, that sector which does not get service from the larger firms.

Mr Cains last week launched a branch of the Arms Group in Perth with the aim of capturing some of the wash-up left in the wake of the giants’ rationalisation.

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