Non-standard lender continues to plot £80m equity capital raise

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The Board of Leeds-based lender, Non-Standard Finance, (NSF) says it is continuing to work on the details of a substantial equity capital raise which is expected to be in the region of £80m.

This is likely to be in the form of a placing and open offer, supported by the company’s largest shareholder.

But NSF says this equity raise is still dependent on it reaching a conclusion to discussions with the Financial Conduct Authority (FCA) regarding the proposed redress methodology for some customers of the Group’s Guarantor Loans Division.

As previously reported, The FCA visited the lender in March last year as part of a multi-firm review and it subsequently “raised a number of concerns” about operating procedures and processes at the Guarantor Loans Division.

NSF’s statement today adds: “The Group is also undertaking a detailed exercise to determine whether there is any read across from this work to the Group’s other divisions and also whether there are any implications from recent decisions at the Financial Ombudsman Service.

“Until this is complete, there can be no certainty as to the outcome, but the Board is currently planning for the capital raise to take place in the third quarter of 2021.”

Since its trading update on 23 February 2021, NSF says it has seen a steady build of month-on-month growth in lending at branch-based lending and home credit which, combined with historically low rates of impairment, has meant that net receivables at both businesses are now returning to growth.

In guarantor loans, net receivables have more than halved since their peak in March 2020 as a result of minimal lending, good collections and the write-off of COVID-impaired customer balances in the 2020 financial year.

The Board of NSF says it will publish its results for the year ended 31 December 2020 on 30 June 2021.