Home Business News Amigo puts itself up for sale

Amigo puts itself up for sale

by LLB Editor
27th Jan 20 11:37 am

Lender Amigo has put itself up for sale after losing more than 75% of its share value since June.

In an update to the stock market, the company said it continues to face a “challenging operating environment”.

It said: “While Amigo remains confident in the robustness of its approach to lending decisions, we are concerned that there may be increased pressure on our business and a continual evolution in the approach of the Financial Ombudsman Service.

“We continually look to enhance our processes and are monitoring developments with a view to assessing the long-term impact on the company.”

Russ Mould, investment director at AJ Bell said, “Will anyone be brave enough to buy guarantor lender Amigo? By saying it wants to sell its 60.66% stake, Amigo’s biggest shareholder Richmond has sent a signal to the market that it sees little chance of value generation in the near term.

“This is somewhat odd as Richmond only recently had two of its representatives appointed to Amigo’s board, which led to the resignation of both the chairman and chief executive.

“Richmond had effectively secured prime position to have a major influence on the company’s strategy – so why effectively walk away before there has been enough time to revive Amigo? One can only presume that the regulatory pressures are too much for Richmond to stand a chance of making a difference with its investment.

“Amigo has been under pressure from the regulator to improve the way it conducted business. The Financial Conduct Authority has been worried that many guarantors do not fully understand the risks they are taking on, as well as too many guarantors ending up paying part of the loan, as well as interest rates potentially being too high.

“Amigo expressed concerns in its latest trading update about ‘increased pressure’ on its business and a ‘continued evolution’ in the approach of the Financial Ombudsman Service, which settles disputes between consumers and business providing financial services. Those comments may suggest Amigo is dealing with a lot of complaints.

“Richmond may have come to the conclusion that this isn’t a fight worth backing and it is better to cut its losses than continue sweating away.”

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