Revenues up 25 per cent at Pepper Ireland ahead of sale to Link Group

Pepper Ireland recorded a 25 per cent rise in revenues to €52 million in the year before its sale on the back of an increase in the number of loan portfolios it services.

Among the loan books it took on during year were the Omni portfolio, consisting of €2.3 billion of loans originated by ACCBank, and PTSB's Glenbeigh portfolio, which included €1.3 billion in residential mortgages.

Pepper also secured a mandate to service the €800 million Deenish loan book that was sold by Ulster Bank to CarVal late last year. However, as that agreement only activated in January, it had no material impact on last year's turnover.

The company had about €18 billion of assets under management at the end of 2019, up from €15.8 billion a year earlier. This included more than 60,000 residential mortgages, of which 80 per cent were performing loans.

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Net assets fell sharply from €53 million to €17.6 million due to a corporate restructuring ahead of its sale in January 2020. Pepper was acquired as part of a €200 million deal for Pepper Europe Servicing by the Australian company Link Group.

As part of the restructuring Pepper received a €6.6 million payment from a fellow subsidiary last year and was repaid a €33.2 million loan from another related unit. It made distributions to its immediate parent Pepper Ireland Finance Holdings totalling €46.3 million.

Profits

Pre-tax profits fell by €3.5 million to €13 million although the 2018 profits had benefitted from a one-off €8.6 million gain arising from the €200 million sale of its residential mortgage business in late 2018 to Finance Ireland.

Pepper had entered the Irish market in 2012 through the purchase of GE Capital’s Irish mortgage book.

A breakdown of 2019 turnover shows that €48.9 million derived from the Republic with a further €3.9 million from the UK. Overall, €44 million of revenues came from servicing fees, up from €34 million a year earlier.

Pepper took on more than 150 additional employees in 2019 linked to the new mandates to bring total headcount to 445. Staff costs totalled €28.8 million while directors’ remuneration totalled €819,321.

The company said that, despite the coronavirus crisis, directors were confident in the outlook for the business based on recent mandate wins and on being an outsourcing partner to Irish banks.