The doorstep lender Provident Financial bought the car finance specialist Moneybarn yesterday for £120m as it looks to broaden its customer base.
The company, which targets customers who are shunned by mainstream lenders, said the deal would “create a third leg of earnings” on top of its core consumer credit division and the Vanquis credit card unit.
Moneybarn offers secured loans through brokers, car dealers and its website. Its team, led by managing director Peter Minter, will remain with the company and report directly to Provident’s boss, Peter Crook.
Mr Crook said: “I am delighted to announce the acquisition of Moneybarn, which is the market leader in the non-standard car finance market. The acquisition complements the organic growth opportunities available to the group. I look forward to working with Peter Minter and his team to realise the significant growth opportunity.”
The former HBOS chief executive James Crosby is among the shareholders who looks set to cash in on the sale. He is expected to make about £850,000, according to reports, because he holds a small stake in Moneybarn. It comes just over a year since he was stripped of his knighthood because of his role in the collapse of HBOS during the financial crisis.
Provident Financial shares rose 5p to 2,070p.
Last month, the sub-prime lender saw its pre-tax profits jump 25 per cent to £90.1m as the amount of people using its credit cards rose 17 per cent to just under 1.2 million. Profits in its traditional doorstep lending business were also up after stripping out costs.
Provident is also gearing up for an assault on the payday lending market through its Satsuma loans business, which it reckons will be an antidote to payday loans despite offering an annualised rate of interest of 792 per cent. Since its launch in November, it has attracted 11,000 customers.
At the time, Mr Crook said: “The online loans market, in which payday lending is the most significant participant at present, is estimated to be some four times the size of the home credit market and is growing as customer preferences change.
“Demand for the product is strong and the continued dislocation caused by the regulatory changes to the payday loans market provides an excellent opportunity to develop a sustainable business with a strong market position.”