Collection House and Balbec form a credit trust

Debt buyer Collection House has formed a partnership with US private equity fund manager Balbec Capital to launch a credit trust.

The Australian Credit Recoveries Trust will invest in purchased debt portfolios. Collection House will provide due diligence and investment recommendations, and will provide ongoing servicing.

Balbec has been in operation since 2010 and is a specialist in the management of distressed receivables portfolios.

Collection House chief executive Matt Thomas said in a statement that the company reviewed various options for growing its purchased debt ledger market share outside of traditional debt and equity funding before settling on the Balbec partnership.

Thomas said: "Our existing business will continue as normal under existing funding arrangements, while the trust provides us with additional means to generate revenue."

Collection House spent A$40.5 million on debt ledger purchases during the six months to December, compared with $38.4 million in the previous corresponding period and $33.9 million in the December half in 2012.

The company made a net profit of $11.2 million for the December half - an increase of 19 per cent over the previous corresponding period.