Cattles to raise £200m in rights issue
CONSUMER lender Cattles is to raise £200m in a rights issue to support an application for a banking licence and funding diversification.
The Leeds-based group already successfully raised a similar sum in February for new bank facilities, the second tranch of which it will receive this month.
Cattles said that although it had been strongly supported in the bank and bond markets for many years and that business was strong, the credit crunch had illustrated the “desirability” of diversified fundings.
The rights issue, together with the group’s debt facilities and retained earnings, will provide the group with the necessary capital to support organic growth and an application to the Financial Services Authority for a banking licence enabling the lender to accept retail deposits for the first time in its history.
David Postings, chief executive of Cattles, said: “Cattles has seen a strong start to the year and we expect trading conditions for our business to remain extremely favourable.
“The company continues to be well funded and the rights issue provides a prudent platform for future growth. I remain very excited about the future prospects of the business.”
Based on independent market analysis and its ability to pay attractive rates, Cattles believes it can raise around £1bn of deposits by the end of 2010.
Other new entrants to the UK retail savings market have been able to raise up to £4bn via internet savings accounts over a period of two years with infrastructure provided by third party outsourcers.
Its performance continues to be buoyant despite the effects of the credit crunch, with the group achieving higher margins on its new lending volumes. However, earlier this year it admitted experiencing a lower level of early customer loan redemptions.
Annual results for the year ended December 31 showed strong income growth of 32.7% with pre tax profits increasing by 24.9% to £165.2m.
Cattles had been involved in discussions regarding the possible acquisition of a consumer finance business, which would have included a banking licence. However, discussions have since been terminated.
Cattles has been evolving away from “doorstep” lending into making loans through a branch network.
In March 2007 it raised £133m in a share placing to expand its operations.
