A shareholder activist group has begun acquiring shares of PRA Group with the plan to get the company to either overhaul its operations or face a fight for control of the company’s board of directors at next year’s annual shareholder meeting.
The Background: Engaged Capital has acquired a 5% stake in the company — which is the threshold for having to disclose the ownership of the shares to the Securities and Exchange Commission.
- The 5% stake make Engaged Capital the fifth-largest shareholder of PRA Group, which gives it significant clout in charting the direction of the company moving forward. PRA Group is one of two publicly traded companies in the accounts receivable management industry. It purchases and collects on charged-off loans across a variety of asset classes.
By the Numbers: Last month, the company announced it lost $12.2 million during the third quarter of 2023, compared with a profit of $24.7 million during the same period last year. It marked the second straight quarterly loss under new Chief Executive VIkram Atal, who took over in March after co-founder Kevin Stevenson was replaced. Atal’s appointment as CEO came a week after an enforcement action between the company and the Consumer Financial Protection Bureau was announced.
What it Wants: A decline in the company’s stock performance is tied to leadership transition, which was “botched” by the company, according to a published report that quoted anonymous sources. Engaged Capital wants a president or chief operating officer appointed who can help oversee more changes and a disciplined approach to the business, including greater automation and more outsourcing, according to the report.
- Improving the operation now will help the company capitalize on favorable market conditions moving forward, Engaged contends.
