S&U to sell home credit arm in £82.5m deal

SOLIHULL-based motor finance and credit firm, S&U, is set to sell its home credit business in a deal worth £82.5m.

The firm is recommending the sale of the business, which trades as Loansathome4u, to Non-Standard Finance following an unsolicited approach.

The proposed deal will generate £80m net of expenses and the profit on sale will increase net assets by £47m and create a net cash balance of £26m.

It will also pave the way for £34m of investment into Advantage – its motor finance arm – and £1m for the development of Advantage’s nascent SME vehicle lending product.

Commenting on the deal, S&U chairman Anthony Coombs, said: “The recent unsolicited approach from Non-Standard Finance plc for our home credit business led the board to reconsider the group’s future strategy.

“The board believes that there are significant benefits from the sale of Loansathome4u for realising fair value for our shareholders; but also significant opportunities to further accelerate the expansion of Advantage and develop its nascent small business vehicle lending products, as well as other higher growth areas of specialist finance.

“It is our intention to make a significant return of capital once we have concluded our assessment of reinvestment options and following discussions with the Company’s shareholders.”

He said the deal marked a significant return of capital and possible future distributions to shareholders.

The deal is conditional upon the approval of the company’s shareholders.

John van Kuffeler, chairman, Non-Standard Finance, said: “Loansathome4u is a leading player in the home collected-credit market. It provides us with a well-established platform; a growing business; attractive operating margins and return on assets; and will form a strong base for NSF as we grow organically and acquire new businesses.
 
“We believe that the application of our management expertise will re-energise and add significant value to Loansathome4u’s business over time. We have already hired additional management; and we will expand the branch network and agent workforce; and invest in systems and technology.

“We remain committed to offering financial services to a disenfranchised part of the UK’s population by treating customers fairly, delivering excellent service and lending responsibly.”

Under the new arrangements, Loansathome4u will be run as a division of NSF, led by Mark Bardsley as chief executive, who is the former managing director of SFS and previously a senior executive at Provident Financial and International Personal Finance.

The business’s branch network and agent workforce will be expanded to grow the customer base and NSF will invest in systems and technology to further enhance Loansathome4u’s underwriting processes to support increased customer acquisition. This will include the deployment of mobile technology across the agent workforce to increase efficiency.

NSF added that additional management would be appointed to support the creation of a larger business, including a Compliance Director, Finance Director, Risk Director and Commercial Director.

The corporate finance team at Deloitte in Birmingham was lead financial adviser on the Loansathome4u deal.

Darren Boocock, the partner who headed the team, said: “This is a landmark transaction in the non-standard finance sector and provides a long-standing Midlands-based business with the opportunity to be a key part of an exciting sector expansion.

“Non-Standard Finance has been established to acquire and operate non-standard consumer finance businesses in the UK. I am confident that the management team and employees of Loansathome4u will enjoy an exciting future as the strategy develops.”