Sunday, August 31, 2014
Update - Moneybarn takeover
Moneybarn the subprime lender has been acquired by Provident Financial Group in a deal worth £120m in cash to shareholders.
The deal adds Moneybarn into a network of lending platforms that includes consumer loans and credit cards and will help the car finance company to extend its business to more customers.
The deal adds Moneybarn into a network of lending platforms that includes consumer loans and credit cards and will help the car finance company to extend its business to more customers.
In a statement Provident Financial said the management of Moneybarn, led by Peter Minter, will be retained under the new ownership.
Minter has been a respected figure in motor finance for a number of years and until recently was chairman of the Finance & Leasing Association's motor finance division. He is also the only member of the car finance industry to sit on Financial Conduct Authority's Smaller Business Practitioner Panel.
He and the rest of the management team will report directly to Peter Crook, chief executive of Provident Financial Group.
Speaking to Motor Finance Crook said: "We envisage that the integration will be straightforward, and assisted by the highly capable management team at Moneybarn remaining in position to run the business day-to-day. We also see multiple potential opportunities for synergies with existing Provident Financial businesses including enhancements to underwriting and collections capabilities and the leveraging of Vanquis's customer base."
Speaking to Motor Finance Crook said: "We envisage that the integration will be straightforward, and assisted by the highly capable management team at Moneybarn remaining in position to run the business day-to-day. We also see multiple potential opportunities for synergies with existing Provident Financial businesses including enhancements to underwriting and collections capabilities and the leveraging of Vanquis's customer base."
In addition Provident will look to expand the profile of Moneybarn from an almost exclusively business-to-business model by adding an element of marketing direct to consumers.
Crook estimates this could potentially add up to two-and-a-half million new customers to the Moneybarn portfolio.
The Provident Financial Group, Crook said, had been looking to add car finance to its offering for a while and added: "We think the non-standard car finance market has significant growth potential and there remains considerable unmet demand. In the future, we think a number of factors including customer needs, an increased attractiveness of car finance relative to other funding options, and a stable car market are expected to support demand for car finance."
The Provident Financial Group, Crook said, had been looking to add car finance to its offering for a while and added: "We think the non-standard car finance market has significant growth potential and there remains considerable unmet demand. In the future, we think a number of factors including customer needs, an increased attractiveness of car finance relative to other funding options, and a stable car market are expected to support demand for car finance."
A golden opportunity
Moneybarn being independent and privately owned presented a good target for the company said Crook adding: "We think Moneybarn is a really exciting opportunity for us. The acquisition will broaden our target customer base and provide us with a highly scalable new avenue of growth.Additionally, Moneybarn's origination in the past had been muted, given the funding constraints on the business. However the existing Moneybarn borrowings can now be refinanced utilising Provident Financial's existing committed facility and support Moneybarn's growth at a significantly lower cost."
The deal will be funded by the issuance of new ordinary shares in Provident Financial.
Commenting on the deal, Peter Minter, managing director of Moneybarn, said "We're delighted Provident Financial Group has acquired the business. We look forward to working with colleagues in PFG and building on our long history of successful growth in our market.
Moneybarn being independent and privately owned presented a good target for the company said Crook adding: "We think Moneybarn is a really exciting opportunity for us. The acquisition will broaden our target customer base and provide us with a highly scalable new avenue of growth.Additionally, Moneybarn's origination in the past had been muted, given the funding constraints on the business. However the existing Moneybarn borrowings can now be refinanced utilising Provident Financial's existing committed facility and support Moneybarn's growth at a significantly lower cost."
The deal will be funded by the issuance of new ordinary shares in Provident Financial.
Commenting on the deal, Peter Minter, managing director of Moneybarn, said "We're delighted Provident Financial Group has acquired the business. We look forward to working with colleagues in PFG and building on our long history of successful growth in our market.
Yes Car Credit
Provident Financial Group has been involved in car finance before. In 2002 it purchased Yes Car Credit, a subprime finance company and dealership for £77m.
Provident Financial Group has been involved in car finance before. In 2002 it purchased Yes Car Credit, a subprime finance company and dealership for £77m.
This initial foray into car finance became a troubled one and after media criticism of the company's selling techniques and a potential loss of £24m due, the company was closed in 2005 with a loss of more than 800 jobs.
Crook, who was not with Provident Financial at the time, said he believes the management team at Yes Car Credit were given overly aggressive targets which led to the errors in judgement that ultimately brought the company down.
In addition Crook said: "Moneybarn is a radically different business from Yes Car Credit. Moneybarn is a cleaner and much more transparent proposition with no ownership of car dealerships or branch network and no reliance on PPI sales.
"We carried out a thorough due diligence process before proceeding with this acquisition and we're very confident that Moneybarn is a high-quality business, accompanied by a strong management team."
"We carried out a thorough due diligence process before proceeding with this acquisition and we're very confident that Moneybarn is a high-quality business, accompanied by a strong management team."
DATED: 31.08.2014
FEED: MF
