14th Aug 2014 11:33
LONDON (Alliance News) - Subprime lender Provident Financial PLC Thursday said it has agreed to acquire Duncton Group Ltd, which operates under the Moneybarn brand, for GBP120.0 million, and later completed an equity fundraising of the same amount before expenses.
The fundraising saw the issuance of 5.9 million new shares, placed by bookrunner JP Morgan Cazenove, the bookrunner, at 2,030 pence per share. Its shares were Thursday quoted up 1.4% at 2,094.00 pence. The shares were placed through an accelerated bookbuild, a process of offering shares in a short time period with little to no marketing. The net proceeds of the placing will be used to fund a "significant proportion" of the Moneybarn acquisition, with the remainder to be funded with existing cash resources.
The company has GBP307.0 million of headroom on its committed debt facilities, more than enough to cover the part of the acquisition unfunded by the equity placing.
In a statement, Provident Financial said it is acquiring Moneybarn, which provides secured car finance to non-standard customers in the UK and operates mainly through brokers, in order to broaden its product offering and to create a "third leg" of earnings to complement its consumer credit and its credit card divisions.
"Moneybarn's origination has been muted recently, given funding constraints, and this leaves scope for growth going forward. The board believes that the business is highly scalable, given the strength of broker relationships and market leading credit decisioning, combined with the strength of the group's balance sheet," Provident Financial said in a statement.
"Potential opportunities for synergies with the group's existing businesses, including enhancements to underwriting and collections capabilities, the development of a business-to-consumer proposition and leveraging the Vanquis Bank customer base, will be evaluated post-acquisition," it added.
For the 2013 financial year, Moneybarn reported audited pretax profit of GBP5.5 million, gross assets of GBP151.6 million and net receivables of GBP128.5 million under UK GAAP. Provident Financial said that Moneybarn's existing management team, led by Peter Minter, will be retained. They will report directly to Provident Financial Chief Executive Peter Crook.
Provident Financial said that Invesco Ltd bought 1.1 million shares under the placing for 22.3 million. Invesco currently holds about 19.2% of the company.
Shares in Provident Financial were Thursday trading 2,102.00 pence per share, up 1.8%.
By Samuel Agini; [email protected]; @samuelagini
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