Provident Financial explores £500m rights issue

Sub-prime lender Provident Financial is looking to raise as much as £500m to pay forthcoming fines and boost its balance sheet as it aims to move on from a troubled spell which plunged the company into crisis.

The Telegraph reported that senior bankers said a rights issue could be unveiled alongside Provident’s annual results which are due to be published tomorrow.

Investment bankers at Cazenove and Barclays have led the discussions with investors and are likely to act as chief underwriters on the deal, if it goes ahead, reported The Telegraph.

Provident was hit by a profit warning in August, leading to the exit of its chief executive Peter Crook, after the company was forced to announced that a transformation programme, which was expected to boost profits to around £150m, was forecast to generate losses of up to £120m.

Crook left the company with immediate effect after 10 years in charge following the profit warning that caused the company’s share price to crash, wiping off £1.7bn in a single day which led to the company becoming one of the biggest one-day fallers in FTSE 100 history.

Manjit Wolstenholme stepped up as executive chairman as she sought to stabilise the group, but she died suddenly last November.

Malcolm Le May was named as her interim replacement, becoming the third person in 100 days to lead the company.

Provident’s troubles have been compounded by regulatory probes. The Financial Conduct Authority is examining its credit card and car finance arms.