Tuesday 23 October 2018

Provident Financial shares plunge on £500 million rights issue reports

The group was down more than 13% on the London Stock Exchange .

A picture of money, as Provident Financial reportedly eyes a £500 million rights issue (PA)
A picture of money, as Provident Financial reportedly eyes a £500 million rights issue (PA)

By Ben Woods, Press Association Chief City Correspondent

Shares in Provident Financial have taken another hammering following reports that the troubled subprime lender is eyeing a £500 million cash call.

The group was down more than 13% on the London Stock Exchange as it looks to push through a rights issue to aid its bruised balance sheet and pay off future fines, the Sunday Telegraph reported.

The announcement could come alongside the company’s annual results on Tuesday, with Cazenove and Barclays expected to be chief underwriters if the move goes ahead.

  • Issued a string of profit warnings
  • Shares tanked
  • Executive chairman Manjit Wolstenholme died

Provident, which is attempting to bounce back from a torrid 2017, revealed earlier this month that Malcolm Le May had joined as chief executive following stints at Barclays and UBS.

The company had a difficult year in which it has issued a string of profit warnings, saw its shares tank and announced the death of executive chairman Manjit Wolstenholme.

To compound matters, the City watchdog recently launched an investigation into one of its sub brands – car loans firm Moneybarn.

The Financial Conduct Authority (FCA) probe will focus on processes applied to customer affordability assessments for car finance and the treatment of consumers in financial difficulties.

As part of efforts to shore up the business, Provident launched a new home credit model in July with the aim of moving from self-employed door-to-door agents to full-time “customer experience managers”.

Numis analyst James Hamilton said: “While we believe it is possible that Provident could secure a contingent capital facility from shareholders, if there is a capital raise we believe a firm outcome from the FCA is required so that the quantum of any customer redress can be known.”

Press Association

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