PRA Group, Inc. PRAA and its partner, RCB Investimentos ("RCB") together announced a strategic tie-up with Banco Bradesco S.A. ("Bradesco"). Per this deal, Bradesco will buy 65% of RCB’s leading and nonperforming loan servicing platform in Brazil, presently owned by the PRA Group.
The deal would bring in Bradesco's local expertise along with RCB's operational efficiency and technology plus PRA Group's data-driven underwriting, which is expected to be highly beneficial to the company’s investors, employees, customers as well as partners.
RCB's founders and Bradesco will continue to operate the platform after the deal’s closure. Ownership of the existing nonperforming loan portfolios, bought by RCB’s current shareholders to the date of this news release will not be included in this transaction.
Moreover, the involved companies will form two new investment vehicles with a major possession of PRA Group. Bradesco and RCB's founders would be holding the remaining part. The vehicles would be used as investment channels for buying nonperforming loans in Brazil. Further, the same would be using RCB's servicing platform apart from the current nonperforming loan portfolios of PRA Group and RCB.
The relationship of PRA Group and RCB dates back to 2015, which enabled PRA Group to penetrate a new market in Brazil, that has generated good returns. The extension is believed to build an excellent position in Latin America's largest economy.
Earlier too, the company made some active collaborations. In May 2017, it partnered with the Internal Revenue Service to utilize a new tax methodology for recognizing net finance receivable revenues effective tax year 2017. Thus, several strategic alliances positioned the company well for long-term growth.
Shares of this Zacks Rank #5 (Strong Sell) company have rallied 28.7% against the industry’s decline of 8.6%.
Stocks to Consider
Investors looking for a few better-ranked stocks in the same sector may consider On Deck Capital, Inc. ONDK, Cardtronics plc CATM and Euronet Worldwide, Inc. EEFT.
On Deck Capital operates as an online platform for small business lending in the United States, Canada and Australia. The company sports a Zacks Rank #1 (Strong Buy) and managed to come up with positive results in three of the trailing four quarters with an average positive surprise of 58.34%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Cardtronics provides automated consumer financial services through its network of automated teller machines and multi-function financial services kiosks. It carries a Zacks Rank #2 (Buy) and managed to pull off an average four-quarter earnings surprise of 40.92%.
Euronet Worldwide, Inc. provides payment and transaction processing plus distribution solutions to financial institutions, retailers, service providers and individual consumers, worldwide. The company carries a Zacks Rank of 2 and delivered an average trailing four-quarter beat of 0.38%.
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