Collection House Limited (ASX: CLH), domiciled in Queensland, Australia, is a B2B receivable management company. The company caters to organizations and individuals and provides them credit management, collections, and customer care digital and data-driven solutions. The company offers professional, ethical, and effective products and services through its eight brands, the Collection House Limited, Lion Finance, CLH Lawyers, CLH Business Services, Collective Learning and Development, Think Me Finance, SafeHorizons, and Midstate Creditcollect Pty Ltd.
Today, the company has come up with a significant announcement. The company has made an equity investment in Volt Corporation Ltd (Volt) and has acquired a stake of approx. 4.5% through its investment of $8.5 million. Volt is the holding company of Volt Bank Ltd (Volt Bank). This investment is expected to have a marginal impact on CLH’s FY19 financial performance, but it has the potential to deliver $3 million of profit in FY20.
Volt Bank Ltd, based in Australia, is a newly established digital bank focussing on delivering a better, fairer, and safer way for its clients to manage their money. It is the first start-up, with no branches, to be licensed as a retail bank in the Australian market since 1981 and today, i.e., 22 January 2019, it has secured the Authorized Deposit-taking Institution (ADI) license from the Australian Prudential Regulation Authority (APRA). Till date, Volt Bank has gone through four rounds of capital funding and has raised more than $45 million in Tier 1 capital.
This investment is expected to enhance the strategic alliance between Volt Bank and CLH, announced on 29 November 2018, focussing on delivering ethical and innovative financial products and services to its customers. The strategic alliance will collaborate CLH’s C5 and call centre software and its debt collection portal to develop analytical tools and resources.
Both the companies have already collaborated their analytical tools and resources which will be available to customers after the Volt Bank launches its products this year. Key areas of interest for both companies are the digitization of hardship identification, assessment and treatment programs, and the integration of components of CLH’s market-leading Customer Portal.
As per the management of CLH, the investment was a part of the company’s ongoing digital transformation strategy further helping its customers to rehabilitate their finances without the burden of excessive interest rates and costs. This investment will also help the company to expand its collection services and analytical services divisions to offer new and innovative financial products and services to its customers.
The management of Volt Bank is also thrilled to strengthen its existing alliance with CLH.
Looking at Collection House Limited’s stock performance and the return it has posted over the last few months, the stock has generated a positive return of 3.08% over the past three months. It closed the day’s trading session at $1.360 with a surge of 1.866% following the news on 22 January 2019. The company has ~138.17 million shares outstanding with the market cap of circa $185.15 million. Its 52-week high and low are marked at $1.695 and $1.200 respectively. CLH has a P/E ratio of 6.98x and an annual dividend yield of 5.82%.
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