Opening of new r2p invest office in the USA. Jan Cerny at the interview
1/1/2021
The r2p invest SICAV, a qualified investor fund that focuses on the purchase and management of outstanding receivables, has a rich history full of major milestones. Thanks to its time-tested model, it has achieved returns of up to 9-10% p.a. With the beginning of the new year, it also passed the CZK 2 billion mark in assets in the fund and is currently focusing on opening a new office in the USA, which is headed by group member Jan Černý.
Jan Černý has had his place in the r2p group for ten years. During this time, he has been part of several projects of the group, was instrumental in the establishment of the Philippines branch and as head of the SPV (Special Purpose Vehicle) fund of R2P LA&CS a.s., he has been actively involved in the development and establishment of other branches in Mexico, Brazil and Egypt. And now he's personally at the next expansion in the US, which he brought us up to date on.
Jan, you are in the USA and you are experiencing first-hand what the economic situation is like there. Can you describe it for us, in view of the opening of the new office?
The economic situation in the United States is a big issue that is undoubtedly resonating around the world. For us, it is also a major topic that influenced the decision whether and why to expand r2p's operations in this region. We are therefore particularly interested in the economic situation in connection with the US debt. And to understand it better, I would like to mention some specific examples and interesting figures.
Let's talk about debt in US households. It has risen by 15.2% over the last year, and household financial savings, on the other hand, are at a 30-year low. Specifically, we are talking about a fall from 7.3% to 4% of GDP in 2023. Turning directly to the level of debt, the average credit card debt per household is currently USD 17 066, an increase of 15.17% compared to 2021. In addition, mortgage debt per household has risen by 8.54% to USD 22 592 and revolving credit, particularly credit cards, has risen by 28.73% to USD 7 486 per household.
So this is the final statistic that you based on before opening the new branch?
In terms of the economic situation with regard to debt in the US, basically yes. I would like to mention, however, that these figures may not reveal the full extent of household debt. In fact, the statistics do not include so-called 'buy now, pay later' loans (BNPL). These are still growing in popularity and have been used by around 18% of Americans in the last year. Some firms offering the service even report a doubling of defaults between 2022 and 2023.
So the statistics I mentioned for the example must be taken with a grain of salt. Nevertheless, it is clear from these figures that the current economic situation in the US is causing higher debt levels, which is vital information for us as a business.
Although these values are essential to the fund's US operations, they are certainly not the only argument for opening a new office. So where do you see r2p invest excelling?
In order to position ourselves in the US market, we obviously need to take advantage of competitive advantages that will ease our way. And we undoubtedly have them. One of them is the way we work with our clients, and especially the flexibility within the whole process. We are able to focus on exactly what the client may be most concerned about and empathise with their needs. We try to essentially function like a doctor who heals the wounds of his business associated with the delinquency of clients. At the same time, we are able to offer consultations in underwriting and client scoring. Our collaboration is based on mutual understanding and trust with the ultimate goal of building long term and mutually beneficial relationships. This is something that clients truly value, whether in South Carolina, where the office is opening, or anywhere else in the world.
You're talking about South Carolina, but in the past there has been talk of opening a new office in connection with Washington DC. Have plans changed?
To be precise, we're not only talking about opening a new branch, but also consolidating with the branch that was originally located in Phoenix. In terms of changes in plans, yes, that is correct. In order to save costs associated with collections, we have decided to move the company from Washington, D.C. to Charleston, South Carolina. This decision was made for two reasons. One is that we are able to reduce labor costs for individual operators in South Carolina by approximately 30%. At the same time, South Carolina is one of the states that does not require a Collection License and has a relatively high non-mortgage debt population. At the same time, we are close to the state of Georgia, which again does not require a Collection License and has the third largest non-mortgage debt population.
It is clear that r2p invest already has a wealth of experience in opening new offices around the world and can make quick and effective decisions. Is this also the reason why you feel confident that the US branch will be successful?
Our years of experience are clearly one of our other competitive advantages. We have a history of analyzing many countries, which allows us to accurately determine the redemption price of a debt portfolio and can segment it accurately on a case-by-case basis.
In general, I can say that r2p's long experience and acquired know-how is something without which we could not confidently expand into new areas. As a result of these years, we have also developed a technology solution for claims management that significantly streamlines our work.
Technological solutions? That sounds interesting, can you tell us something specific about it?
We are talking about the Debthor technology solution, which is a unique software that enables proper filtering and advanced case segmentation. At the same time, it significantly reduces the time that individual operators spend on each debt case. Its efficiency lies in the fact that it enables fast and accurate analysis of cases, which ultimately leads to savings in time and resources.
Currently, we are not aware of any standard collection agencies in the U.S. that have a similarly innovative solution yet, which gives us a slight competitive advantage in optimizing collection processes. It is therefore one of the other reasons why we believe that the new office in South Carolina will bear fruit.
