The owners open to sell – E24

The rise in interest rates has been brutal for the debt collection industry. Sparebank 1 has seen the values ​​in Kredinor crumble.

A sharp rise in interest rates has produced blood-red figures and a sharp fall in value for the country’s largest debt collection company, Kredinor.

Now the owners, the Sparebank1 group and the Kredinorstiftelsen, are opening for a sale.

Newly elected Kredinor chairman Torbjørn Martinsen confirms this to E24.

– Both owners will be open to all possibilities, whether it is a sale of the company or a structural solution. But before getting there, the company must show good underlying profitability, says Martinsen.

Interest rate shock

The sharp rise in interest rates is hitting the debt collection industry hard, and contributed to Kredinor losing half a billion kroner last year.

– This is due to the sharp rise in interest rates, and the fact that there has been a development in people’s finances which means that those who have defaulted on debt have an even weaker service ability, says Martinsen.

He will now take action to reverse the trend.

– We will now draw up a good strategy for the company’s operations, where the main focus will be on Kredinor’s core business, which is debt collection and portfolio purchases. So my wish is that we implement measures that can get the company to deliver good, black figures, says the chairman.

Changed ownership

In addition to the election of a new chairman, the general meeting in Kredinor this week approved changes in the ownership relationship between the Sparebank1 group and the Kredinor Foundation.

The background is that a crisis loan from the Sparebank1 group of NOK 675 million to Kredinor earlier this year has been converted into shares.

This changes the ownership fraction to nearly 69 per cent for the Sparebank1 group and around 31 per cent for the Kredinorstiftelsen, from the previous 50/50.

Crumbles up

The transaction is based on a valuation of Kredinor of NOK 1.2 billion, according to the stock exchange announcement.

That is NOK 2.4 billion lower than what Kredinor was valued at when Kredinor and Sparebank1 group-owned Modhi Finans merged in 2022. At that time, the value was NOK 3.6 billion.

This is confirmed by former Kredinor chairman Sverre Gjessing. He also explains the sharp fall in value.

– The main reason is very simple, it is due to the rise in interest rates. Kredinor has large portfolios of defaulted debts that need financing, and that financing has become more expensive, says Gjessing to E24.

– High leverage

He points out that the fall in value is common to the entire industry, and parallel to the development seen in the property industry.

The competitor Intrum, with a net debt of nearly SEK 58 billion, has similar challenges.

– How does an entire industry come to a standstill at the same time?

– All industries that have a high loan-to-value ratio face the same challenge today, says Gjessing.

He adds that there have also been some challenges linked to the merger of Kredinor and Modhi Finans.

The companies merged as of October 2022, which meant that the Kredinorstiftelsen and Modhi owner Sparebank1 group shared ownership.

– Consolidation

The valuation of NOK 1.2 billion is before the loan of NOK 675 million, according to Gjessing. That values ​​the company at close to NOK 1.9 billion today.

In the same stock exchange announcement, it is announced that Kredinor may come into play.

“The value has been negotiated between the two owners of Kredinor, with the support of external advisers, and reflects that an agreement has also been entered into on how proceeds from a possible sale of the company will be distributed between the owners,” it says.

Newly elected chairman, Torbjørn Martinsen, elaborates.

– It is implicit when such an agreement is made that a sale may be one of the possibilities. There have been many consolidations in the industry, and it is in the cards that further consolidation may soon come, he says.

– On line

He is supported by chairman Sverre Olav Helsem in the Kredinor Foundation.

– We feel that we and Sparebank 1 are aligned in the strategy of a full or partial sale of the company when the company and the market are ripe for this, writes the chairman in an e-mail to E24.

The foundation valued Kredinor at over NOK 2.1 billion in 2022, before the merger with Modhi Finans.

Today, the foundation’s ownership is valued at approximately NOK 600 million, around 31 per cent of “a company twice as large”, notes the chairman.

– The development of the value reflects the development in the company and the market Kredinor is a part of, writes Helsem.

Billion losses

Kredinor has a history dating back to 1876 and until 2022 was a co-operative, owned by the customers, or the members of the co-operative.

The form of ownership was then changed to a limited company so that Kredinor could raise capital and participate in structural changes, which the co-operative was not open to.

The Kredinor foundation was then established to be a long-term owner in Kredinor.

The foundation can pass on Kredinor dividends in accordance with cooperative principles, but also has charitable purposes, according to the articles of association.

The chairman is not worried about weaker dividend prospects.

– Kredinorstiftelsen has the necessary working capital for several years of operation also to fulfill the foundation’s purpose, he writes.