Provident Financial takeover: ‘The time for change is now’

Non-Standard Finance (NSF) has issued its proposed £1.3bn takeover bid of the Bradford-based subprime lender, Provident Financial, to shareholders today.

John van Kuffeler, chief executive of Non-Standard Finance and former Provident boss, has told Provident shareholders that “the time for change is now.”

In February, NSF announced it was looking to acquire Provident Financial to “create a market leader in the non-standard finance sector.” The company valued each Provident share at 551 pence and the entire share capital at £1.3bn, and NSF says it has the formal support of 49.4% of shareholders for the deal.

NSF has given Provident shareholders until 8 May to consider the hostile takeover bid. In response to the offer letter, Provident has once again reiterated the the offer should be rejected to it being “strategically and financially flawed and presents significant risk in terms of both execution and shareholder value.”

Today, NSF has posted the offer document to Provident shareholders in which it outlines “a compelling and achievable vision for a better future” for them.

Kuffeler states: “As a team we believe that we can improve Provident for the benefit of all of its stakeholders. Before founding NSF I was CEO and then Chairman of Provident for a total of 22 years. By the end of my tenure there, I was incredibly proud of the values and culture that had been established, both of which I believe underpinned the business’s success and gave shareholders a cumulative total return of more than 4,000 per cent. over that period.

“Since I stepped down, Provident has lost its way. This has included compromised customer outcomes resulting from a number of ‘managerial mistakes’ (as the Provident Chairman acknowledged earlier this week), reduced profits and a dramatic share price decline.

“Despite claiming to have ‘stabilised the business’ and ‘resolved all material outstanding regulatory issues’, Provident remains a group which: is subject to enhanced supervision, and under investigation, by the FCA; has agreed restrictions on its distributions and activities with, and is subject to increased capital requirements imposed by, the PRA; was sanctioned by the ASA for irresponsible marketing initiatives as recently as January; and which announced earlier this week the near-completion of millions of pounds of customer compensation payments as a piece of good news.”

In January, shares at Provident Financial dropped by nearly 20% in trading – wiping £320m from its market value. The drop came after the firm said it expected its full year results for 2018 to be on the “lower end” of market expectations.

NSF claims that the current board of Provident has “limited operational experience” in the non-standard finance sector; and that the firm doesn’t understand the “key issues involved in managing a business like Provident.”

Under new ownership, NSF said it can revitalise Provident’s prospects and rebuild culture delivered by a strengthened management team with proven sector expertise; unlock substantial value for Provident and NSF shareholders, whilst benefiting customers and employees; and achieve cost savings, revenue synergies and reduced funding costs as well as unlock the potential for capital returns over time from disposals and capital efficiency (all subject to appropriate regulatory approval).