Forum Archive Index - May 2000

["simon dallimore" <smndallimore@hotmail.com>]

New boy on collection block

02.05.2000 - By GEOFF SENESCALL

Australian Paul Cooney vows that his new company, Receivables Management 
Group, will be a vigorous competitor to Baycorp.

"One of the problems in New Zealand is there has not been any choice," he 
said.

An indication that the market was taking seriously this new entrant -- which 
has the backing of Auckland entrepreneur Eric Watson -- saw Baycorp's share 
price tumble 61c yesterday to 979c.

However, while Baycorp dominates the local debt collection and information 
services business, it was its move into the Australian market midway through 
last year that provoked Mr Cooney's initiative.

Through a joint venture with the Australian company Data Advantage, Baycorp 
has established a company across the Tasman called Alliance Recoveries.

"What I saw was the risk that a company coming into the receivables market 
in Australia, with access to capital and nominal access to the credit 
information database of Data Advantage, would have a strategic
advantage," Mr Cooney said.

"If we allowed them to get a foothold in the Australian market, then the 
market share -- which was spread around lots of other companies -- would 
come under threat."

Mr Cooney, who has been involved in the debt collection business in 
Australian for 30 years and is president of the Australian Collectors 
Association, said he had been toying for the past 12 months with the idea of 
bringing together a collection of companies and listing them in Australia. 
The idea took hold when he was invited to talk to analysts in Australia 
about the Baycorp Data Advantage joint venture, because "most of them were 
totally unfamiliar that the receivables sector existed.

"That gave me an opportunity to talk to a number of players and explain the 
nature of the industry and our own business against the aspirations that Bay 
and Data Advantage had for the Australian market. Having spoken to them I 
took comfort that there was an opportunity for
us to do an IPO [initial public offering].

"I began working with some brokers in Australia ... and negotiated with a 
number of companies, which basically form the core of what we have today." 
This includes six New Zealand companies and 10 Australian.

Mr Cooney said it was through networks in New Zealand that he was introduced 
to Cullen Investments, the private investment vehicle of Mr Watson. Cullen 
was interested in going into the information market, given it had a several 
investments including Pacific Retail Group, which used Baycorp information 
services, he said.

"What they deliver to me I couldn't have matched in any other way, 
specifically the capital markets expertise and the databases in New Zealand, 
and I was able to deliver to them 16 companies ready to come together."

So in December a decision was made to team up with Cullen and to back 
Receivables Management Group into Frontier Petroleum, a company listed on 
both sides of the Tasman, and one in which Cullen had an investment.

"Between December and now we have been completing those negotiations, 
putting together this quite dramatic revolution in the receivables market in 
Australia and New Zealand."

Mr Cooney said that Receivables Management Group had a much larger 
receivables business, which included billing, ledger management, credit and 
debt services. This was where Baycorp derived around 50 per cent of its 
business.

"We will, as a result of the rationalisation of the businesses that has 
already started, genuinely provide an alternative source of receivables 
management and debt collection facilities.

"This will be done through call-centre technology out of our Australian 
operation and through the fact we are already the largest commercial 
recovery company in New Zealand.

"We are not the largest receivables company in New Zealand, because Baycorp 
has a large consumer debt recovery business and does a lot of work in ledger 
management and pre-collection work.

"Our commercial arm gives us unique information and the largest commercial 
database of information.

"So there will be market segments where we will immediately have strength to 
compete with Baycorp.We will then build on those strength through the 
association that we now have through companies in the
Cullen group."

"We are confident we will have credit activity information that will not be 
available to Baycorp.

"So we will compete by initially being the largest supplier of commercial 
credit information, by building our consumer credit information activities 
and going into the credit information market through the unique data we have 
through the our position in the commercial market."

Mr Cooney said that its alliance with receivables giant NCO Group in the US 
would broaden the net of services Receivables Management Group could offer.
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