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.
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.