Wermuth Asset Management exits Russia with 3x profit

Wermuth Asset Management’s (WAM) Greater Europe Deep Value Fund SPV has exited it investment in National Recovery Service (NRS), a debt collection service provider based in Russia and Eastern Europe. The investment generated a return of 3.2x on capital invested and an IRR of 17 per cent.

NRS services 450 clients through its 72 offices across Eastern Europe. It currently employs over 1,500 professionals and operates four state-of-the-art call centres in Moscow, Novosibirsk, Volgograd and Kiev. Since 2006, NRS has recovered over 10 billion roubles for its clients, which include major Russian and international financial service institutions, telecoms and other companies.
WAM founding partner and CIO Jochen Wermuth (pictured), says: “Given that we invested in 2007, when most deals were richly priced due to global exuberance, the 2008 global financial crisis was around the corner and the 2014 Russian-Ukrainian conflict would see EU-sanctions imposed on the financial sector, the >3x return achieved is a huge success. It proves once again that a long-term impact investment strategy committed to promoting the highest ethical standards and resource efficiency works particularly well in times of crisis.”
Marina Shestakova, Chief Risk Officer and Head of the Moscow Branch, adds: “At the time of investment it was unclear how a modern, polite and call centre based collection platform would succeed in Russia. Our belief was, however, that by using modern technologies and advanced call centres in which staff are constantly faced with a mirror image of themselves to ensure they look friendly at all times, as well as voice-monitoring software to ensure they sound friendly, this platform could indeed succeed, contrary to the prejudiced view of “Moscow debt collection” which immediately invokes images of big guys with baseball bats visiting debtors. Contrary to this image, our commitment to the highest ethical standards, coupled with the fair and respectful treatment of our clients led to, in our opinion, the development of Russia’s leading debt collection agency in terms of profitable growth. The focus on call centres as opposed to on-site visits reduced time spent, kilometres driven and energy consumed and thus also helped profitability.”
Wermuth Asset Management believes that NRS will enjoy continued success with its new shareholders on board, particularly in hard economic times when there is a heightened need for debt collection and more outsourcing in the financial sector.
Artur Aleksandrowicz, NRS CEO, says: “We are grateful to our superb shareholder group who worked diligently and tirelessly with management and key advisers to finalise this transaction in a difficult environment. Now we move to the next phase of our company development.”