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Provident Financial buys Moneybarn

Provident Financial is buying Duncton Group and its operating brand Moneybarn
August 20, 2014

Provident Financial (PFG) is buying Duncton Group, which operates through the Moneybarn label, and provides non-standard car finance loans. The purchase price of £120m will be met entirely through a successful £120m placing of 5.9m new shares, or 4.1 per cent of the issued share capital.

IC TIP: Buy at 2,112p

The acquisition will give Provident a third leg to its revenue stream; the other two comprise doorstep loans and the Vanquis credit card, and will provide an immediate boost to underlying earnings, with pro-forma cash profits in the year to last June of £20.8m. Provident will also be taking on £145m of debt, but this will still leave overall gearing with adequate headroom. Following the acquisition, this debt is expected to be refinanced at considerably lower cost.