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
- 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.
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